VIENNA (Reuters) - Austrian real estate group Conwert CONW.VI rejected Deutsche Wohnen’s 1.2 billion euro ($1.3 billion) takeover offer on Tuesday as too low.
“The business outlook for 2015 and 2016 and Conwert’s refinancing potential are not adequately reflected in the offer made by Deutsche Wohnen AG,” the company said in a statement.
Deutsche Wohnen launched its 11.50 euro per share cash bid for Conwert last week and ruled out sweetening the price despite criticism from some Conwert shareholders.
Conwert, which is shedding eastern European assets to concentrate on more stable income from residential property in Germany and Austria, forecast funds from operations before sales and one-off effects (FFO I) could surpass 50 million euros in 2016.
FFO I fell 3.9 percent in 2014 to 34.8 million euros, while the company had guided for a level over 30 million. It projects FFO I this year of around 40 million.
Reducing borrowing costs and more efficient property management should help improve FFO, it said.
German property has become a hot market given rock-bottom interest rates and attractive yields and Conwert’s property portfolio is mostly in Germany.
Minority shareholders in Conwert said last month the 1.2 billion euro bid was too low, helping to push shares in the Austrian property firm above the offer price. They closed on Tuesday at 11.805.
Conwert, which has said it was surprised by the approach, has hired JP Morgan (JPM.N) as an adviser.
Deutsche Wohnen already controls more than 30 percent of Conwert via agreements with shareholders.
The offer, which has a minimum acceptance threshold of 50 percent plus one Conwert share, ends on April 15. It also covers Conwert convertible bonds and bids 6.35 euros each for shares in its Eco Business Immobilien unit EBIV.VI until April 24.
The approach is the latest in a string of deals in Germany’s fragmented real estate sector, including Deutsche Annington’s ANNGn.DE 3.9 billion euro takeover of Gagfah GFJG.DE in December and Deutsche Wohnen’s 1.7 billion bid for GSW in 2013.
Conwert shareholders Petrus Advisers, activist investor Cube Invest and Austrian fund 3-Banken-Generali have all questioned the Deutsche Wohnen offer.
($1 = 0.9157 euros)
Reporting by Michael Shields; Editing by Ruth Pitchford