Gagfah/Deutsche Annington see BKartA Phase I running to late January
Deutsche Annington’s [ETR:ANN] takeover bid for Gagfah SA [FRA:GFJ] is expected to see the Bundeskartellamt (BKartA) Phase I merger review run into late January, according to two sources close to the situation.
The deal had been notified to BKartA, the German competition watchdog, on 1 December. The original Phase I deadline ran for one month to 2 January (to bypass the 1 January holiday), a BKartA spokesperson told this news service. But BKartA had asked in December for more information on the deal, the first source said.
Given this request and the potential for delays over the festive season, the parties and BKartA decided it was not in their collective interest to “run against a formal deadline that would require [BKartA] to enter into Phase II,” the first source added.
The BKartA spokesperson declined to comment on the Gagfah/Deutsche Annington case. It is possible for the regulator to cancel an initial notification and start a new case in order to give time to investigate the transaction without triggering a Phase II investigation, he added.
This scenario is the track the case has taken and explains why the offer document published on 18 December only references a planned filing with BKartA on 2 January 2015, despite the deal having been initially notified on 1 December 2014, the first source said. The additional information the regulator had requested was filed on 2 January, both sources said. This would bring the official deadline to 2 February, as the BKartA standard Phase I lasts a month.
Tomorrow (Tuesday) BKartA will file its “merger list” update on the cases it is reviewing at approximately 10:00 CET (09:00 GMT), the spokesperson added. This will flag the status of the Gagfah filing, he said.
BKartA had asked for more detail on the companies’ housing portfolios in smaller cities, including Dresden and Kiel, as well as further information on their presence in the North Rhine-Westphalia region, the first source said.
In Dresden, Gagfah has 36,900 rental units and Annington 900 units, according to a Deutsche Annington investor presentation, compared with the city’s population of around 531,000. Gagfah has around 15% of the rental market in Dresden, a person familiar with the situation said. A 40% combined market share generally raises eyebrows in merger review.
Gagfah has 15,100 rental units in Berlin versus Annington’s 15,700 units. The capital had some 2m households in 2013, according to the Federal Statistics Office. In North Rhine-Westphalia, Annington has 95,000 units to Gagfah’s 16,000, totalling 111,000 units in a region with a population of 17.57m.
Both sources said they were confident the deal would be approved in Phase I, though perhaps not before the offer period closes on 21 January. Two local independent lawyers told this news service last month that they expected the deal to secure Phase I clearance.
Deutsche Annington and Gagfah declined to comment.