Germany's second-largest real estate group Deutsche Wohnen warns shareholders that the Vonovia SE $10.9 billion hostile bid on the company is inadequate and is bound to fail.

According to Reuters, Deutsche Wohnen urged shareholders not to agree on the hostile acquisition deal from its bigger rival Vonovia. The company said that the structure and value of the offer is doomed to fail, since it was "inadequate."

Vonovia won the regulatory approval to buy Deutsche Wohnen for 9.9 billion euros last week. The deal would be on a fully diluted basis and will be under 14 billion euros worth of debt.

"We continue to believe that this offer won't get majority support" from Deutsche Wohnen shareholders, said Chief Executive Officer Michael Zahn in a report by Bloomberg News. "We see our negative stance backed up by the statements made by our shareholders."

Zahn has told 60 percent of the shareholders about the dangers of the bid in the past few weeks. Vonovia and Deutsche Wohnen are the two biggest real estate firms in Germany. They have been on a takeover battle since October when Vonovia made its bid.

If 50 percent of the shareholders in Deutsche Wohnen will agree with the acquisition by January 26, then the deal will push through.

"The premium offered with consideration on the stock prices lies significantly below the premia paid for comparable transactions in the German residential real estate sector," according to Deutsche Wohnen in a report by The New York Times, "and even signifies a discount against the median of analyst target share prices."

According to Zahn, the deal will undervalue the company's growth. Vonovia spokesperson Nina Henckel, however, said Duetsche Wohnen's warnings against the acquisition will not influence their assessment on the offer for the shareholders. She said the merger will create value for all the investors, renters, and the stakeholders.