Real Estate Group Deutsche Wohnen plans to acquire GSW to expand its business in Berlin (Reuters)
German real estate group Deutsche Wohnen plans to buy rival GSW Immobilien as it eyes a greater hold on the capital Berlin's booming property market.
Deutsche Wohnen said in a statement that will offer 51 shares for every 20 GSW shares, which will value the firm at €1.75bn ($2.3bn, £1.5bn), in an all-shares bid.
Berlin-based Deutsche Wohnen said subject to the deal's approval of at least 75% of its shareholders at an extraordinairy general meeting on 30 September, the proposal would leave GSW with 43% of the combined company.
"With more than two thirds of the combined portfolio located in Berlin, the combined company would have a strong focus on one of the most dynamic growth regions in Germany," Deutsche Wohnen said in a statement.
In the first half of 2013, the firms' combined cash flow would have been €119.7m.
There would be an extra cash flow of around €25m a year from the combined firm's operations, though this would only be realised once the merger had been fully completed around two years after the merger deal closes.
One off transaction and integration costs would total €45m if a deal went through, said Deutsche Wohnen.
"The complementary portfolio, particularly in Berlin, will result in increased economies of scale in the management and administration of properties as well as savings on the procurement side," the company added.
GSW, which is also based in Berlin, is yet to replace its former chief executive, Bernd Kottmann, who quit in July after just two months in the job when shareholders revolted against his leadership.
Despite the disruption, GSW posted an improved performance for the first half of 2013, after operating profit rose 14.7% on the same period a year before.
Deutsche Wohnen is country's second largest real estate company by market value behind the largest Deutsche Annington Immobilien. It had already indicated in 2011 that it wanted to acquire GSW.
The firm holds 90,000 apartments across Germany. The combined company would have about 150,000 apartments, with its properties valued at €8.5bn.
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