By Alexander Hübner and Matthias Inverardi

DUESSELDORF (Reuters) -Europe’s biggest real estate takeover could fall through, at least for now, after Germany’s Vonovia warned on Friday that it likely had not secured the backing of enough shareholders in its target Deutsche Wohnen.

The deadline for Deutsche Wohnen shareholders to tender stock passed at midnight on Wednesday and Vonovia needs to collect at least 50% of its rival’s shares for the deal to proceed.

Vonovia said the latest tally indicated it had only received commitments for 47.6%. A final result is due Monday.

The deal would create a $22 billion property giant with 550,000 apartments.

“A combination of the two companies makes a lot of sense,” Vonovia Chief Executive Rolf Buch said in a statement. “Unfortunately, an insufficient proportion of the current shareholders of Deutsche Wohnen have turned in their shares.”

The deal has been controversial in Germany amid tensions over soaring rents ahead of general elections in September. Executives have promised the merged company would work with politicians on providing affordable housing.

The offer price of 52 euros per share was fair, Vonovia said on Friday, though it would now “carefully consider all options available to it”, including the launch of another public offer that could potentially sweeten the deal.

Buch failed in his 2016 attempt to take over Deutsche Wohnen. But unlike last time, Deutsche Wohnen’s CEO favours the deal.

“The challenges on the real estate market could be shouldered even better together,” Deutsche Wohnen CEO Michael Zahn said in a statement.

Earlier on Friday, a person familiar with the matter said some hedge funds, which hold about a third of Deutsche Wohnen’s stock, may not have tendered shares in the hope a deal would eventually go through at a higher price.

Complicating matters, a number of hedge funds and index funds that hold Deutsche Wohnen shares are only able to trade in their shares once the minimum acceptance quota has been reached, Vonovia said.

“We aren’t in distress,” Buch later told Reuters in an interview. “Vonovia can proceed as before even without Deutsche Wohnen. Our business model isn’t in question.”

(Reporting by Alexander Huebner and Matthias Inverardi; Writing by Maria Sheahan and Tom Sims, editing by Kirsten Donovan, Keith Weir and David Evans)

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