FRANKFURT—Two of Germany's largest apartment owners, Deutsche Wohnen AG and LEG Immbolien AG, have agreed to a business combination that would create a portfolio of 250,000 units valued at about €17 billion, or approximately US$19.2 billion. Deutsche Wohnen's stock-for-stock deal, which LEG's board has voted to accept, values LEG at just over €4.6 billion, or US$5.2 billion.

Bloomberg Business reported that the deal, which comes after an acquisition spree by market leader Vonovia SE, represents a 13% premium on the closing price of LEG stock prior to Sunday's announcement. “It looks to me like a defensive move against potentially being taken out by Vonovia, rather than a move that makes a lot of financial sense in its own right,” Peter Papadakos, a London-based analyst at Green Street Advisors, told Bloomberg on Sunday. “The 13% premium strikes me as a rather full price.”

Known as Deutsche Annington until earlier this month, Bochum, Germany-based Vonovia is Europe's second-largest publicly traded real estate company. It controls a portfolio of 370,000 apartments across Germany, valued at €21 billion (US$23.7 billion). Much of that scale has come about in the past six months, through its acquisitions of rivals Gagfah Immobilien and Suedewo Group for a combined US$7 billion.