BayernLB successfully sells its 92 percent stake in GBW AG to an investor syndicate led by PATRIZIA
08 April 2013
- EU requirement for non-discriminatory tender process complied with
- Buyer accepts comprehensive social charter to protect tenant rights
Munich- The BayernLB Board of Management has approved the sale of BayernLB's 92 percent stake in GBW AG to an investor syndicate led by PATRIZIA. In an extraordinary meeting today, the Board of Management's action was endorsed by BayernLB's supervisory board, the Board of Administration. The syndicate consists of a group of well-known German insurance companies, savings banks, and pension funds with a long-term investment strategy. The transaction is still subject to approval by the competition authorities but is expected to close in the second quarter of this year.
Following the sale of LBS to the Bavarian savings banks at the end of 2012, this transaction marks another major milestone in fulfilling the conditions laid down in the European Commission's state aid ruling handed down on 25 July 2012.
The gross sales price values the stake in GBW AG at EUR 2.453 billion or EUR 17.58 per share. After deducting GBW AG's debts, the net price amounts to EUR 882 million representing a book profit of approximately EUR 200 million for BayernLB.
PATRIZIA won the bidding in a transparent and non-discriminatory tender process agreed with the European Commission under which the award was to go to the financially most attractive offer. PATRIZIA's bid in the tender process which began in mid-October 2012 was the financially best offer from every angle.
From the beginning of the tender process, BayernLB's Board of Management has been highly aware of its social responsibility to protect the interests and rights of GBW's tenants. This was accomplished within the leeway permitted in the state-aid ruling by means of a comprehensive social charter to protect tenants. Under the terms of the European Commission's state-aid ruling, BayernLB was limited to including only protection provisions that were in line with typical market transactions. Compliance with all of the European Commission's conditions is closely and constantly monitored by the monitoring trustee; only transactions that fully comply with the terms of EU law are legally valid.
All bidders, including PATRIZIA, agreed in advance to comply with the provisions of the social charter as a precondition to bidding. This includes a provision that the rules protecting individual tenants must be incorporated into the lease agreements of the current tenants as soon as possible, but no later than 15 months after the buyer acquires the shares in GBW.
Under one of these, current tenants are protected against having their lease cancelled for a 10-year period. Disabled tenants and tenants over age 60 are permanently protected. Both provisions continue to apply even if the building is later sold to another firm. Rent increases on buildings included in the package are only permitted to a limited extent for the first five years. In addition, high-grade, expensive renovation of apartments can only be carried out in this period with the agreement of the tenant. Moreover, the purchaser is required to invest at least EUR 15 per square meter for the whole portfolio of buildings.
Local governments have a first-purchase right on any buildings put up for sale in their jurisdictions within the first three years. This does not affect the tenant's first purchase rights, of course.
In order to verify compliance with these conditions, the buyer agreed to an independent auditor making an annual report each year until 2022. The buyer will be subject to painful fines if it fails to comply with the terms of the social charter.
The terms of the social charter, which is part of the sales contract, far exceeds GBW AG's current internal social standards and tenant protection laws.
Furthermore, PATRIZIA has agreed to comply with the terms of the wage agreements covering the roughly 360 employees of GBW for a period of five years.