Deutsche Wohnen: (non)sincerity or (non)consistency?

At the EGM on 23 January 2025, Deutsche Wohnen shareholders will vote on a Domination Agreement. The proposal involves either an exchange of securities for Vonovia shares or a fixed annual payment. We examine the conditions, structure, and implications of the offer for Deutsche Wohnen’s minority shareholders, and suggest potential impacts on Vonovia’s creditors and shareholders.

For nine months, Vonovia prepared its offer for Deutsche Wohnen. In 39 days, including the Christmas period, a complete recalibration of the Expert model based on more realistic or appropriate assumptions was presumably not feasible. However, there was sufficient time to scrutinise the structure of Vonovia’s offer and identify several inconsistencies.

Our analytical approach is straightforward. We conduct a comparative study to ensure balanced assumptions and the intellectual integrity of the offer. The analysis does not aim to re-evaluate Vonovia’s proposals or replace the Experts’ conclusions but to assess their validity, fairness, and the valuation implications for Deutsche Wohnen’s minority shareholders. This method neutralises the “self-comparison” by the Expert, who compares Deutsche Wohnen to the Vonovia Group, where Deutsche Wohnen constitutes 25% to 50% of the economic substance, depending on the metrics used.

The Deutsche Wohnen business plan was presented in the report. As the Vonovia business plan was not included, it is derived by subtracting the Deutsche Wohnen Business Plan from the Vonovia Group consolidated Business Plan. The Experts fully accepted the business plans proposed by Vonovia.