UPDATE 2-Conwert buys 60 percent stake in KWG
* Price not disclosed
* KWG shares up 8.7 pct, Conwert shares up 4.2 pct (Adds seller is Ehlerding, no squeeze-out, updates shares)
By Georgina Prodhan and Angelika Gruber
VIENNA, Dec 21 (Reuters) - Conwert Immobilien is to buy 60 percent of German residential property group Kommunale Wohnen from its major shareholder, boosting the Austrian company's German portfolio by two thirds.
Conwert said on Friday it would finance the acquisition of Hamburg-based KWG roughly equally in cash and shares and would soon start a new buyback programme for up to 2.5 million shares that will run until the end of March.
While the parties did not disclose financial details of the deal, Conwert's biggest acquisition to date, a source familiar with the situation said the price was in the range of 70-80 million euros ($93-$106 million).
KWG's current market capitalisation is 97 million euros.
The seller, the source said, was Karl Ehlerding, a former self-made billionaire who turned a small German firm, WCM, into a property group worth 7 billion euros at its height and which tried to buy Commerzbank.
Conwert shares were up 4.2 percent to 9.87 euros by 1011 GMT, outperforming a flat European real-estate index. KWG shares rose 8.7 percent to 6.65 euros.
A spokesman for Conwert said: "We are currently on an expansion course. We are not done yet", adding Conwert had no plans to try to squeeze out KWG's remaining shareholders.
German property is a popular defensive play for European real estate firms amid economic crisis in the euro zone.
German landesbank BayernLB is selling its GBW property unit and has attracted at least three bidders offering up to 2.5 billion euros who are seeking to team up with insurers and pension funds, sources have told Reuters.
Conwert said part of the purchase price for the deal, which it hopes to complete by the end of January 2013 after receiving cartel authority approval, was dependent on KWG achieving certain targets.
KWG, whose chief executive Stavros Efremidis will join Conwert's executive board in February, said it welcomed the takeover by Conwert which it said was a "strategic partner". ($1 = 0.7555 euro) (Editing by Dan Lalor)