BY Richard Summerfield
Prologis Inc has agreed to acquire its rival, industrial real-estate firm Liberty Property Trust, in an all stock deal valued at around $12.6bn, including the assumption of debt.
Under the terms of the deal, Liberty shareholders would receive 0.675 times a Prologis share for each unit they hold, about $61 a share. The deal is expected to close in the first quarter of 2020.
The deal is expected to generate immediate savings of around $120m from administrative costs, operating leverage, lower interest expense and lease adjustments, the companies said in a statement. The acquisition will also bolster Prologis’ presence in a number of target markets, such as Lehigh Valley, Chicago, Houston, Central PA, New Jersey and Southern California.
In order to complete the deal, Prologis has announced that it plans to dispose of approximately $3.5bn of assets on a pro rata share basis. This includes $2.8bn of non-strategic logistics properties and $700m of office properties.
“Liberty and Prologis represent two of the finest teams of real estate professionals and two of the finest portfolios of industrial real estate ever assembled,” said Bill Hankowsky, chairman and chief executive of Liberty. "The joining of these two platforms at this moment, when industrial logistics has become so pivotal to the new economy, will further the industry’s ability to support the nation’s supply chain and enhance value creation for our combined shareholders. It is a testament to Liberty’s outstanding teams of professionals, both present and past.”
“Liberty’s high-quality logistics real estate will strengthen our portfolio as well as our customer roster,” said Eugene F. Reilly, chief investment officer at Prologis. “We are also excited about the caliber of talent at Liberty and expect a number of their employees to join us to help manage the portfolio and execute on capital deployment.”
“Liberty’s logistics assets are highly complementary to our US portfolio and this acquisition increases our holdings and growth potential in several key markets,” said Hamid R. Moghadam, chairman and chief executive at Prologis. “The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies.”
The companies have also identified future synergies with the potential to generate approximately $60m in annual savings, including $10m from revenue synergies and $50m from incremental development value creation.
News: Prologis to buy warehouse rival Liberty in $12.6 billion deal