Vonovia SE (XTRA:VNA) entered into an agreement to acquire remaining 70.01% stake in Deutsche Wohnen SE (XTRA:DWNI) for €12.8 billion on August 1, 2021. Under the terms Cash offer is €53 per share. Prior to the transaction Vonovia holds 29.99% stake in Deutsche Wohnen SE. The transaction is financed using bridge financing of €16.6 billion and rollover of debt of €6.4 billion. In addition, the management board of Deutsche Wohnen, with the approval of the supervisory board, has resolved, subject to certain conditions to increase the share capital of the Company by €19.6 million by issuing 19.620147 million new shares to be issued to Vonovia.

The proposed takeover offer will be subject to a minimum acceptance threshold of 50% and other customary conditions. The management board and the supervisory board of Deutsche Wohnen welcome Vonovia's planned improved takeover offer and, subject to the review of the final offer document, intend to support it and recommend its acceptance to the shareholders. Accordingly, Deutsche Wohnen has agreed to an exemption from the one-year lock-up period. As the planned takeover offer shall be made within the statutory lock-up period of one year after the minimum acceptance ratio of the takeover offer previously made by Vonovia has not been reached, prior exemption by BaFin is required.

New public takeover offer and the publication of a decision to launch such an offer by a bidder pursuant are not permitted for one year following the end of the acceptance period, unless the target consents and the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) waives the blocking period Vonovia to file for exemption from blocking period from BaFin. With respect to the outstanding convertible bonds of Deutsche Wohnen, it will, as agreed, determine the settlement mechanism in the event of a change of control upon conversion (cash payment or delivery of shares) in due time until the publication of the offer document relating to the takeover offer. Vonovia has undertaken not to enter a domination and/or profit and loss transfer agreement with Deutsche Wohnen for a period of three years from today's date of the conclusion of the BCA. As of September 14, 2021, Vonovia acquired additional stake and hence it holds more than 30% stake. As of September 27, 2021, the minimum acceptance of 50% was reached.

Subject to their review of the new offer document, the boards of Deutsche Wohnen intend to recommend such an offer to their shareholders. The transaction has received approval from The German Federal Financial Supervisory Authority ("BaFin"). The Board of Vonovia and Wohnen consider the offer price of €53 per Deutsche Wohnen share offered by Vonovia as fair and adequate. Both boards therefore recommend shareholders to accept the new, improved offer by Vonovia. As of September 13, 2021, Vonovia SE has waived the minimum acceptance threshold and all other closing conditions.

As of September 14, 2021, Vonovia SE announced to waive off all conditions for the transaction. The consummation of the transaction is expected late September or early October 2021. The closing is now expected to take place in Q4. As on September 23, 2021, the Target Board agreed an amended offer very quickly with a minimum adjustment to the offer terms. Recognizing the risk that the amended offer would be rejected once again, the Target Board also included a number of measures to ensure Vonovia's success-Providing Vonovia with almost ~10% of Deutsche Wohnen shares via sale of 3.53% of treasury shares for €52 per share, sale of a further 0.93% of treasury shares at €53 per share, issuance of primary shares amounting to 5.17% on a fully diluted basis and Agreeing to waive all conditions, which forces many shareholders to sell or tender their shares as the takeover is effectively considered as "over" prior to Vonovia even acquiring the majority support of Deutsche Wohnen shareholders.

The Board has effectively handed control to Vonovia and worked around its own shareholders. Davidson Kempner has applied for an injunction to prevent the primary share issuance of 5.17% and the sale of 0.93% treasury shares. Davidson Kempner also reserves its rights to pursue other legal action. Davidson Kempner currently owns an aggregate 11.4 million shares, 3.2% of the share capital of Deutsche Wohnen SE. As of August 23, 2021, the offer period begins today and is expected to end on September 20, 2021. As of September 13, 2021, offer period was extended to October 4, 2021.

As of October 5, 2021, Vonovia secured control of 55.56% of the shares. All shareholders of Deutsche Wohnen who tender their shares by this deadline will receive €53 per tendered share within a few days and no later than October 14, 2021. As of October 7, 2021, secured control of 60.30% of the voting rights of Deutsche Wohnen. Deutsche Wohnen shareholders who have not yet accepted the offer have the opportunity to tender their shares during the additional acceptance period for €53 in cash per share. The additional acceptance period begins on October 8 and ends on October 21, 2021.

Carsten Berrar, Konstantin Technau, Max Birke, Axel Beckmerhagen and Michael Rosenthal from Sullivan & Cromwell (Germany) LLP served as a legal advisor for Deutsche Wohnen. UBS Investment Bank acted as financial advisor to Deutsche Wohnen SE. Morgan Stanley, Perella Weinberg, Bank of America Merrill Lynch acted as financial advisor to Vonovia. J.P. Morgan AG acted as financial advisor to Deutsche Wohnen SE.