German property group Vonovia has cut the level of backing it needs from shareholders in an effort to salvage its hostile takeover bid for its closest rival, Deutsche Wohnen.

Germany’s largest listed landlord said on Monday evening that it was cutting the approval threshold for its €14bn bid from 57 per cent to 50 per cent of Deutsche Wohnen shareholders, in order to increase the likelihood that the transaction went through.

As of Friday, Vonovia had control of 20.6 per cent of Deutsche Wohnen’s capital and voting rights, according to regulatory filings published on Vonovia’s website.

The decision to adjust the threshold automatically extends the offer period, which had been due to expire on Tuesday, for two more weeks, meaning that Deutsche Wohnen shareholders now have until February 9 to tender their shares. Vonovia is not allowed to adjust the offer terms again.

Vonovia said it had taken the decision after it emerged in discussions with shareholders that some index funds and holders of Deutsche Wohnen’s convertible bonds were not allowed to tender until a deal had been successful.

Stefan Kirsten, Vonovia’s chief financial officer, said the move did not change the company’s “declared goal” of gaining a holding in Deutsche Wohnen of 50 per cent plus one share, on a fully diluted basis. “We can only achieve the full potential for synergies with a majority,” he said.

Deutsche Wohnen is vehemently opposed to a deal it has argued will “destroy value”.

Lars Wittan, chief investment officer, said the move showed “that Vonovia has recognised that a clear majority of Deutsche Wohnen shareholders reject the hostile takeover”.

“Now Vonovia wants to force through a takeover against the majority of Deutsche Wohnen shareholders — and is justifying this with technical constraints. This offer is and remains value-destroying for shareholders of Deutsche Wohnen,” he said.

The decision by Vonovia to lower the acceptance threshold for the deal is the latest twist in the battle for supremacy in the German property market.

Vonovia and Deutsche Wohnen have emerged from two years of frenetic dealmaking as the two biggest listed entities in the sector. Vonovia owns about 370,000 homes, while Deutsche Wohnen has about 147,000.

Last autumn, Deutsche Wohnen launched a bid to buy Germany’s third largest listed landlord, LEG Immobilien, in a €7.6bn deal that would have created a group with a similar market value to Vonovia.

Vonovia, which spent €3.9bn to buy landlord Gagfah in 2014 and bought Südewo, a southern German property owner, for €1.9bn last June, countered by saying it would make a bid for Deutsche Wohnen if Deutsche Wohnen’s shareholders refused to back the bid for LEG.

Deutsche Wohnen’s bid duly failed, leaving it and Vonovia in a straight takeover battle.

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