Establishing a real estate giant: A case study on the growth journey of Samhällsbyggnadsbolaget i Norden AB ("SBB") and the acquisition of Hemfosa Fastigheter AB ("Hemfosa")

Sammanfattning: This single-case study contains a two-track investigation of SBB, including the company's growth journey and acquisition of Hemfosa. The aim is to display an in-depth analysis from a unique real estate narrative, social infrastructure, that provides key success factors and decisive insights from the remarkable growth journey as well as the all-time largest real estate M&A deal in the Nordics. First, with regards to SBB's growth strategy, we identify non-cash acquisitions and a wide financing base with strong credit rating focus as fundamental in scaling the business. Although those strategy cornerstones have paved the way for rapid growth, we find that favorable market conditions with low interest rates has been a decisive factor, facilitating SBB's ability to grow. Second, the Hemfosa transaction evolves around several key motives. Building scale by combining the two property portfolios and substantial synergies mainly from refinancing of Hemfosa's bank debt in the bond market, thus exploiting SBB's investment grade credit rating. In addition, we also find strong vertical integration motives and that Hemfosa was likely undervalued at the time of the transaction. The case further presents a Mix & Match bid composition as crucial to finance the deal and in parallel to safeguard the combined entity's capital structure and credit rating, essential for realizing financial synergies and to maintain the ability to grow. In summary, the study sheds light on how real estate and the case aligns and differs from traditional theories in Finance.