JC Flowers publishes €1.1bn offer document for Hypo(3)

JC Flowers & Company and two partners are pursuing a €1.1 billion investment in German commercial real estate lender Hypo Real Estate.

JC Flowers set the clock ticking on it bid to acquire up to 24.9 percent in Hypo Real Estate.

The financial services buyout firm has set a deadline of midnight 23 June to get the required approval to invest €1.1 billion ($1.7 billion) in the real estate lender, whose shares tanked in January amid revelations of subprime-related asset write downs.

Publication of its tender document follows approval from BaFIN, the German Federal Financial Supervisory Authority, JC Flowers said.  

Hypo’s shareholders have been awaiting the document since 16 April when Flowers and its two partners revealed their intention to acquire up to 24.9 percent of the German company. Flowers is working in tandem with private equity real estate firm Grove International Partners and Japanese financial institution, Shinsei Bank Limited. Hypo, which has already said it welcomed the approach “in principal”, is expected to comment further once it has reviewed the offer document.  

The cash offer price amounts to €22.50 per Hypo share, which equals a total maximum consideration of approximately €1.1 billion, assuming full acceptance of the offer. The offer is subject to the conditions and terms described in the offer document, including a minimum acceptance condition of at least 20 percent of the currently outstanding share capital of Hypo.

The offer is being made by HRE Investment Holdings L.P., an investment vehicle established for the purpose of making the offer on behalf of trusts advised by JC Flowers and funds managed by affiliates of Grove International Partners. The group of investors are advised by Morgan Stanley and Hengeler Mueller.

Hypo Real Estate spun out of German Bank HVB in 2003. HVB was later bought by Italy’s Unicredito. Last year Hypo acquired German lender Depfa bank for €5.7 billion, aiming to expand its financing capabilities for infrastructure and reduce its exposure to commercial property.