FRANKFURT German property group TLG Immobilien is preparing a takeover offer for peer WCM after agreeing to buy a majority stake from the company's largest shareholders.
TLG is offering one of its shares in exchange for 5.75 of WCM shares, valuing WCM shares at 3.15 euros apiece, a premium of 4 percent on the average price over the last three months, it said on Wednesday.
Reuters earlier reported that a takeover offer from TLG for WCM was imminent, sending WCM shares 9 percent higher.
Based on the closing price of the TLG's shares prior to the offer announcement, the offer price amounts to 3.36 euros per WCM share, TLG said.
That values WCM at 443 million euros.
TLG added it has agreed to buy a 26 percent stake in WCM from peer DIC Asset, as well as stakes held by WCM supervisory board member Karl Ehlerding and WCM Chief Executive Stavros Efremidis.
TLG will create new shares through a capital increase and has already entered a business combination agreement with WCM.
WCM said it will support the offer, which will be launched in late June, and recommends that its shareholders accept it.
While Germany's property market has seen a flurry of deals in the residential and office sectors, few have been struck in commercial real estate.
TLG, which manages formerly state-owned eastern German offices, shops and hotels was privatised in 2012 and listed on the stock exchange in 2014.
It has since expanded into western Germany and earlier this year raised capital to fund acquisitions of German office and retail properties.
WCM's portfolio comprises of 57 assets throughout Germany with a market value of more than 796 million euros, mainly buildings housing supermarkets and DIY retailers as well as office space, according to its website.
Investors have been attracted to Germany's real estate sector in recent years by a reliable income stream and higher yields than German sovereign bonds. Investors have also been betting on rising property prices in Europe's largest economy.
(Reporting by Alexander Hübner and Arno Schuetze; Editing by Maria Sheahan and Elaine Hardcastle)