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TLG IMMOBILIEN and Aroundtown sign BCA and announce exchange offer to create leading pan-European commercial real estate company

- TLG shareholders to receive 3.6 Aroundtown shares for each TLG share implying a EUR 27.66 offer price per TLG share or a 3.2% premium based on last closing prices

- TLG's management and supervisory board support the exchange offer and TLG's largest shareholder irrevocably supports the transaction

- Combined company to become a listed pan-European leader in commercial real estate with over EUR 25 bn in assets

- Significant overlap in Berlin, Frankfurt, Dresden, Leipzig, Hamburg, and access to Munich, Amsterdam and London, representing over half of the combined portfolio

- Management expertise and scale to accelerate develop-to-core in prime locations and realize full potential of nearly EUR 2 bn combined development portfolio

- Expected operational and financial synergies to result in annual pre-tax FFO increase of EUR 110 million to EUR 139 million over time

- New board structure of combined company to create balanced governance framework ensuring TLG representation subject to Aroundtown's shareholdings in TLG

Berlin, 19 November 2019 - TLG IMMOBILIEN AG ("TLG") (ISIN: DE000A12B8Z4) today entered into a business combination agreement ("BCA") with Aroundtown SA ("Aroundtown") to create one of the leading commercial real estate companies in Europe. Under the terms of the BCA, Aroundtown intends to launch a voluntary public exchange offer to all TLG shareholders.

The combination will create the leading pan-European commercial real estate platform with over EUR 25 billion in assets primarily in office, hotel and residential real estate. The combined portfolio will provide exposure to key metropolitan cities with Berlin, Frankfurt, Dresden, Leipzig, Munich, London, Hamburg and Amsterdam, representing more than half of the portfolio. In addition, a development portfolio of nearly EUR 2 billion and a combination of management capabilities enables significant future value creation, including for tenants and shareholders.

The members of the management board of TLG commented: "The transaction with Aroundtown is a unique opportunity for TLG to strengthen our presence in key cities in Germany as well as access new markets. Our combined development pipelines and market reach enables us to accelerate our growth together. We will be able to achieve significant synergies resulting in higher operating margins, improve our credit profile and thereby attain a financial profile that would have been hard to achieve on our own."

Sascha Hettrich, Chairman of TLG: "The proposed combination is a promising next step in the evolution of TLG and enables the creation of an attractive company for all our shareholders and stakeholders. The increased scale enables the combination to unlock upside potential across the organization, where the role and contribution of TLG is sustainably reflected in the new governance structure."

TRANSACTION TERMS

Aroundtown has announced to offer all TLG shareholders 3.6 Aroundtown shares for each TLG share. The exchange ratio was derived from TLG's and Aroundtown's EPRA NAV per share, in each case as of 30 June 2019. Based on the XETRA closing prices (Frankfurt Stock Exchange) for the shares of both companies as of 18 November 2019, the implied price per TLG share amounts to EUR 27.66, representing a premium of 3.2% to TLG's last closing price.

Aroundtown will create the offer shares under its authorized capital and not require an affirmative shareholder vote. The consummation of the exchange offer will be subject to certain closing conditions. The voluntary offer is not expected to be conditional on a minimum acceptance ratio.

TLG's management and supervisory boards welcome and intend to support the exchange offer, subject to their fiduciary duties and certain support conditions which inter alia seek to mirror select closing conditions of the exchange offer on the side of Aroundtown. TLG will cease to endorse the exchange offer in the event of a competing offer for all shares in TLG which its management and/or supervisory board deem in TLG's best interest.

The final and binding terms of the offer will be set out in the offer document, which is expected to be published in December 2019. The provisions of the BCA will have a term of 24 months.

Ouram Holding S.à r.l., TLG's largest shareholder, has, subject to certain conditions, committed to tendering its approximately 28% stake into the offer.

SYNERGIES

The combination of TLG and Aroundtown creates one of the largest pan-European commercial real estate platforms that would create significant value in the range of EUR 110 million to EUR 139 million in pre-tax FFO improvements per year within five years post-merger, which will be realized through operational synergies, financial savings by accelerating Aroundtown's goal of a rating upgrade and financial synergies on TLG level through benefitting from a higher rating.

Operational synergies in the range of EUR 24 million to EUR 34 million pre-tax per year are expected to result primarily from efficiency gains through joint operations and headquarters, strong portfolio overlap, cost optimization on corporate cost level, ancillary cost reduction, scale benefits, IT systems among others.

Financing synergies would derive from a stronger business profile through a larger and more diversified portfolio, which will accelerate the goal of reaching an A- credit rating, resulting in improved financing terms and access to longer maturities. The total financing savings are to be realized through proactive liability management and may amount to an EUR 86 million to EUR 105 million pre-tax FFO improvement per year and are expected to be achieved over a period of 5 years.

GOVERNANCE

Upon successful consummation of the proposed transaction the combined company will benefit from an improved and balanced governance structure, including an independent management body. The BCA also stipulates certain governance rights for TLG which reflect the principle of joint leadership in the controlling company of the combined group.

Aroundtown shall introduce a new management body consisting of 5 members, of which TLG may nominate the CFO, if Aroundtown holds more than 50% of all TLG shares. Aroundtown will nominate the CEO. In case Aroundtown holds at least 66% of TLG's shares, TLG may nominate one of the remaining three members. One of the TLG-nominated members shall be Co-CEO.

If Aroundtown exceeds the 50% threshold, its board of directors shall comprise up to 8 members, comprising Aroundtown's current three executive members and up to four independent members within the meaning of Luxembourg listing rules. If Aroundtown holds 40% or more of TLG's shares, the chairman of the board shall be nominated by TLG and have a casting vote in case of a tie.

Upon receipt of the requisite merger clearance, TLG may nominate two out of four members in a newly formed integration committee at the level of Aroundtown, the primary objective of which is the discussion of the necessary steps to integrate both businesses. Further, TLG may nominate an additional member to Aroundtown's advisory board.

TLG-nominated members of Aroundtown's management body and board of directors will retain their positions for a term of at least two years. Certain of TLG's nomination rights are subject to TLG's continued support of the exchange offer in its management and supervisory boards' reasoned statements.

COMBINED GROUP

The combined company shall continue its German operational headquarters in Berlin and will carry a new name.

Both parties respect all labor-related provisions in Germany and agree that motivated employees form the basis for the future success of the combined company and the management team and employees are to be selected based on the best-in-class principle.

For a period of up to twelve months, Aroundtown shall provide liquidity for TLG's refinancing needs that may result from a change-of-control event in existing financing arrangements.

Both companies will maintain their respective current dividend policies.

Goldman Sachs, Kempen and UBS are acting as financial advisers and Sullivan & Cromwell is acting as legal adviser to TLG.

JOINT CONFERENCE CALL

TLG and Aroundtown will host a joint conference call on Tuesday 19 November at 10:00h CET.

To participate please register via this link: https://webcasts.eqs.com/aroundtown20191119

 

CONTACT

Christoph Wilhelm Corporate Communications Phone: +49 30 2470 6355 E-mail: christoph.wilhelm@tlg.de

Oliver Sturhahn Investor Relations Phone: +49 30 2470 6089 E-mail: oliver.sturhahn@tlg.de

 

IMPORTANT INFORMATION

THIS ANNOUNCEMENT IS NEITHER AN OFFER TO EXCHANGE OR PURCHASE NOR A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE SHARES. MOREOVER, THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION TO PURCHASE AROUNDTOWN OR TLG SHARES. THE FINAL TERMS AND FURTHER PROVISIONS REGARDING THE EXCHANGE OFFER (THE "OFFER") WILL BE IN THE OFFER DOCUMENT ONCE ITS PUBLICATION HAS BEEN APPROVED BY THE GERMAN FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT). THE FINAL TERMS AND CONDITIONS OF THE OFFER WILL BE SET FORTH IN THE FULL OFFER DOCUMENT AND MAY, TO THE EXTENT LEGALLY PERMISSIBLE, DEVIATE FROM THE CONDITIONS AND OTHER KEY PARAMETERS DESCRIBED HEREIN. INVESTORS AND HOLDERS OF TLG SHARES ARE STRONGLY RECOMMENDED TO READ THE OFFER DOCUMENT AND ALL OTHER DOCUMENTS IN CONNECTION WITH THE OFFER AS SOON AS THEY ARE PUBLISHED, AS THEY WILL CONTAIN IMPORTANT INFORMATION.

TLG SHAREHOLDERS RESIDENT IN THE UNITED STATES OF AMERICA ("UNITED STATES") SHOULD NOTE THAT THE OFFER IS BEING MADE IN RESPECT OF SECURITIES OF A COMPANY WHICH IS A FOREIGN PRIVATE ISSUER AS DEFINED BY RULE 3B-4 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT") AND THE SHARES OF WHICH ARE NOT REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT. THE OFFER IS BEING MADE WITH RESPECT TO UNITED STATES HOLDERS OF TLG SHARES IN RELIANCE ON EXEMPTION AVAILABLE FOR CROSS-BORDER TENDER OFFERS. THESE EXEMPTIONS PERMIT A BIDDER TO SATISFY CERTAIN UNITED STATES SUBSTANTIVE AND PROCEDURAL EXCHANGE ACT RULES GOVERNING TENDER OFFERS BY COMPLYING WITH HOME JURISDICTION LAW OR PRACTICE AND EXEMPTS THE BIDDER FROM COMPLIANCE WITH CERTAIN OTHER SUCH RULES. AS A RESULT, THE OFFER IS PRINCIPALLY GOVERNED BY DISCLOSURE AND OTHER REGULATIONS AND PROCEDURES OF THE FEDERAL REPUBLIC OF GERMANY, WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES, INCLUDING WITH RESPECT TO WITHDRAWAL RIGHTS, OFFER TIMETABLE AND SETTLEMENT PROCEDURES. TO THE EXTENT THAT THE OFFER IS SUBJECT TO THE US SECURITIES LAWS, SUCH LAWS ONLY APPLY WITH RESPECT TO TLG SHAREHOLDERS IN THE UNITED STATES AND NO OTHER PERSON HAS ANY CLAIMS UNDER SUCH LAWS.

SUBJECT TO THE EXCEPTIONS DESCRIBED IN THE OFFER DOCUMENT AS WELL AS ANY EXEMPTIONS THAT MAY BE GRANTED BY ANY COMPETENT REGULATORY AUTHORITY, A TAKEOVER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY, IN ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE LAWS OF SUCH JURISDICTION.

IN PARTICULAR, THE AROUNDTOWN SHARES THAT ARE INTENDED TO BE TRANSFERRED TO TLG SHAREHOLDERS AS CONSIDERATION (THE "OFFER SHARES") HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE, DISTRICT OR OTHER JURISDICTION OF THE UNITED STATES OF AMERICA. THE OFFER SHARES MAY NOT BE OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, TO TLG SHAREHOLDERS LOCATED IN THE UNITED STATES OF AMERICA (THE "U.S. SHAREHOLDERS"), OR TO AGENTS, NOMINEES, TRUSTEES, CUSTODIANS OR OTHER PERSONS ACTING FOR THE ACCOUNT OR BENEFIT OF U.S. SHAREHOLDERS, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

TO THE EXTENT PERMISSIBLE UNDER APPLICABLE LAW OR REGULATION, AND IN ACCORDANCE WITH GERMAN MARKET PRACTICE, AROUNDTOWN OR ITS BROKERS MAY PURCHASE, OR CONCLUDE AGREEMENTS TO PURCHASE, TLG SHARES, DIRECTLY OR INDIRECTLY, OUTSIDE THE OFFER, BEFORE, DURING OR AFTER THE PERIOD IN WHICH THE OFFER REMAINS OPEN FOR ACCEPTANCE. THIS APPLIES TO OTHER SECURITIES THAT ARE DIRECTLY CONVERTIBLE INTO, EXCHANGEABLE FOR, OR EXERCISABLE FOR TLG SHARES. THESE PURCHASES MAY BE COMPLETED VIA THE STOCK EXCHANGE AT MARKET PRICES OR OUTSIDE THE STOCK EXCHANGE AT NEGOTIATED CONDITIONS. ANY INFORMATION ON SUCH PURCHASES WILL BE DISCLOSED AS REQUIRED BY LAW OR REGULATION IN GERMANY OR ANY OTHER RELEVANT JURISDICTION AND WILL ALSO BE PUBLISHED IN THE FORM OF AN UNOFFICIAL ENGLISH TRANSLATION ON THE INTERNET WEBSITE OF AROUNDTOWN. TO THE EXTENT INFORMATION ABOUT SUCH PURCHASES OR ARRANGEMENTS TO PURCHASE IS MADE PUBLIC IN GERMANY, SUCH INFORMATION ALSO WILL BE DEEMED TO BE PUBLICLY DISCLOSED IN THE UNITED STATES.

TO THE EXTENT THAT ANY ANNOUNCEMENTS IN THIS DOCUMENT CONTAIN FORWARD-LOOKING STATEMENTS, SUCH STATEMENTS DO NOT REPRESENT FACTS AND ARE CHARACTERIZED BY THE WORDS 'WILL', 'EXPECT', 'BELIEVE', 'ESTIMATE', 'INTEND', 'AIM', 'ASSUME' OR SIMILAR EXPRESSIONS. SUCH STATEMENTS EXPRESS THE INTENTIONS, OPINIONS OR CURRENT EXPECTATIONS AND ASSUMPTIONS OF TLG AND THE PERSONS ACTING IN CONJUNCTION WITH TLG, FOR EXAMPLE WITH REGARD TO THE POTENTIAL CONSEQUENCES OF THE OFFER FOR TLG, FOR THOSE SHAREHOLDERS OF TLG WHO CHOOSE NOT TO ACCEPT THE OFFER OR FOR FUTURE FINANCIAL RESULTS OF TLG. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES AND FORECASTS WHICH TLG AND THE PERSONS ACTING IN CONJUNCTION WITH TLG HAVE MADE TO THE BEST OF THEIR KNOWLEDGE, BUT WHICH DO NOT CLAIM TO BE CORRECT IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT ARE DIFFICULT TO PREDICT AND USUALLY CANNOT BE INFLUENCED BY TLG OR THE PERSONS ACTING IN CONJUNCTION WITH TLG. IT SHOULD BE KEPT IN MIND THAT THE ACTUAL EVENTS OR CONSEQUENCES MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR EXPRESSED BY SUCH FORWARD-LOOKING STATEMENTS.

ABOUT TLG IMMOBILIEN AG

For over 25 years, the listed company TLG IMMOBILIEN AG has owned and rented out commercial properties in selected promising locations in Germany. The company continuously develops its portfolio and actively generates value through strategic investments and selected property acquisitions. As at 30 September 2019, its portfolio contains properties worth EUR 4.6 bn. As at the same reporting date, the adjusted EPRA Net Asset Value per share amounted to EUR 30.25. The portfolio comprises office properties in cities including Berlin, Dresden, Frankfurt/Main, Leipzig and Rostock. It also contains a regionally diversified portfolio of retail properties, primarily in the neighbourhood shopping segment, in promising micro-locations as well as seven hotels in top central locations. The properties of TLG IMMOBILIEN AG stand out not only due to their excellent locations but also because of their long-term rental or lease agreements. Its highly qualified employees guarantee extensive local market expertise at its individual locations.

This publication contains forward-looking statements based on current views and assumptions of TLG IMMOBILIEN AG's management and made to the best of knowledge. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause TLG IMMOBILIEN AG's revenues, profitability or the degree to which it performs or achieves its targets, to materially deviate from what is explicitly or implicitly stated or described in this publication. Therefore, persons who obtain possession of this publication should not rely on such forward-looking statements. TLG IMMOBILIEN AG accepts no guarantee or responsibility regarding such forward-looking statements and will not adjust them to future results or developments.