US hedge fund Davidson Kempner has said a capital increase by German landlord Deutsche Wohnen is “legally questionable”.
It is seeking an injunction to block the increase, saying the “sole purpose” is to help rival Vonovia overcome shareholder resistance to their proposed €18bn (£15.4bn) merger.
The proposed deal has received lacklustre support from Deutsche Wohnen shareholders.
Last month, Vonovia increased its initial bid of €52 a share made in May by €1, a 17% premium on the undisturbed share price. In mid-September it waived all offer conditions.
The deal would create a real estate giant owning 500,000 flats in Germany, Austria and Sweden valued at almost €90bn.
Davidson Kempner, which holds a 3.2% stake in Deutsche Wohnen, said that the company’s pledge to issue new shares and sell them to Vonovia was “unprecedented and legally questionable” and “raises serious corporate governance concerns”.
Deutche Wohnen has dismissed the criticism.
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