IMMOFINANZ AG and Immoeast AG, Austria's largest property developers, may merge after losing more than 85 percent of their combined market value in six months.
"The advantages of a merger between Immofinanz and Immoeast will be fully evaluated with a view to implementing this measure," the Vienna-based companies said yesterday in a statement obtained by Bloomberg News.
Immofinanz shares climbed as much as 57 percent and Immoeast gained up to 51 percent in the Austrian capital, making them the biggest winners on the Bloomberg Europe Real Estate Index yesterday.
Karl Petrikovics, the 54-year-old founder of Immofinanz and Immoeast, quit as CEO of both companies on October 6 after the credit crisis forced him to abandon development projects. His replacement, Thomas Kleibl, will focus on managing and integrating assets in central and eastern Europe.
If the two companies decide to combine, shareholders will vote on the plan in the first quarter of 2009, the statement said. Immofinanz owns 54 percent of Immoeast and together they have assets of about 15 billion euros (US$20.5 billion).
A merger would "neutralize" a loan of 1.8 billion euros that Immoeast granted to Immofinanz, Der Standard reported last Friday.
A merger would probably result in an increase in value for shareholders of both companies, the statement said. Immofinanz owns office buildings, hotels, homes and other properties in Austria, Germany, Italy and Switzerland, while most of Immoeast's real estate is in Poland, the Czech Republic, Slovakia, Hungary and Romania.
Immofinanz rose 39 euro cents, or 37 percent, to 1.44 euros at 10:30am in Vienna yesterday, while Immoeast lifted 24 euro cents, or 31 percent, to 1.01 euros. Together, the firms have a market value of about 1.5 billion euros, down from 8.2 billion euros six months ago.
Kleibl, 49, the former chief financial officer of Austrian Airlines, took up his new post yesterday. Previously, he was the manager of Wienerberger Ziegelindustrie AG, a unit of Wienerberger AG, the world's largest brick maker.
Immofinanz was set up in 1990 and Immoeast was created eight years later to manage eastern European assets.