ProLogis Turns Down $547M European Arm Takeover

LUXEMBOURG-Denver-based ProLogis has purchased 11 million common units of its subsidiary ProLogis European Properties, bringing its share in the European industrial property firm to 38%, and is offering $8.82 per share for the rest of the roughly 120 million shares. The move is a defensive measure in response to a takeover bid from a joint venture for $8.68 per share of ProLogis’ stake.

The Sydney-based Goodman Group and APG Strategic Real Estate Pool said Wednesday that it was considering to offer the $8.68 per share, which the venture valued at about $547 million. In a statement, Goodman said the offer was to take over management of the ProLogis subsidiary and keep a 25% interest each for Goodman and APG, with the rest being provided to “leading global real estate investors.”

However, ProLogis CEO Walter Rakowich said in a response statement that his firm has no intention or desire to sell its interest or management in PEPR, as both firms are entwined. "Under ProLogis' management, PEPR's occupancy has consistently outperformed the broader pan-European market by 300-500 basis points," Rakowich said. "Additionally, over the last two years, ProLogis has managed the refinancing or repayment of over $1.9 billion of debt on behalf of PEPR."

Rakowich said the mandatory tender offer will be open for two-to-four weeks. JP Morgan is acting as financial advisor to ProLogis.

Patrick Kanters, managing director of APG’s Global Real Estate division, said that the takeover would provide a compelling value proposition for all unit holders that would close a persistent gap between PEPR’s trading price and its underlying net asset value. The move would also address concerns about the pending merger between ProLogis and AMB Property Corp.

“The proposed transaction would also mitigate concerns that have arisen in respect of the additional conflicts of interest that will result from the proposed merger of ProLogis and AMB,” according to the Goodman statement. “Following this merger, and taking into account the recently announced joint venture between AMB and Allianz, there would be a total of five ProLogis / AMB vehicles that invest in core European logistics assets and may therefore be competing for the same business opportunities in the same territory.”

The PEPR company was established in 1999 and was listed on the Euronext Amsterdam in 2006. The firm has a portfolio of 232 buildings covering 52.7 million square feet, with an occupancy level of 94.5%, in 11 European countries, with a market value of $4 billion.

APG is a pooled investment vehicle established in the Netherlands with assets under management of about $383 billion. Goodman has $15 billion of total industrial and business assets around the world, with $4.9 billion in Europe. Goodman was formerly known as Macquarie Goodman Group. Macquarie Capital Advisers is acting as financial advisor to the Goodman venture.