SAN FRANCISCO AND DENVER — First reported last week as the two parties entered discussions, industrial REITs ProLogis and AMB Property Corp. have reached a definitive agreement to merge, creating one of the world's largest industrial real estate owners. The new company is expected to have a pro forma equity market capitalization of approximately $14 billion, a total market capitalization in excess of $24 billion and gross assets owned of approximately $46 billion.
The combined company is anticipated to save $80 million in G&A costs. Under terms of the agreement, each ProLogis common share will be converted into 0.4464 units of a newly issued AMB common share, and the combined company will operate as an UPREIT. Upon completion of the merger, anticipated in second quarter 2011, the company will operate under the name ProLogis and will trade under the ticker symbol “PLD” on the New York Stock Exchange.
“We have the opportunity to build a pre-eminent industrial real estate company on a global scale,” said AMB Chairman and CEO Hamid Moghadam in a video on the company’s web site about the merger. “We can service our customers better, provide better products for our investors, and create a great deal of shareholder value. We think we will have unparalleled access to opportunities around the globe,.”
To view the video, click here.
The combined AMB-ProLogis portfolio contains 600 million square feet of distribution facilities in North America, Western Europe and Japan. ProLogis is also established in the United Kingdom and Central and Eastern Europe, and AMB has a presence in China and Brazil.
“By joining forces, this merger will create a company positioned to be the leading global provider of logistics real estate — a blue chip REIT,” said Moghadam in a statement.
Moghadam and Rakowich, ProLogis' CEO, will serve as co-CEOs of the new company through December 31, 2012, after which, Rakowich will retire and Moghadam will become the sole CEO of the company. He will also serve as chairman of the board for the combined company. Rakowich will serve as chairman of the board's executive committee until his retirement.
In addition, ProLogis CFO William Sullivan will continue in his role and will retire on December, 31, 2012. During this time, AMB CFO Thomas Olinger will be responsible for the day-to-day integration of the two companies and will become CFO of the combined company after Sullivan retires.
The combined company's headquarters will be located in San Francisco.
— Randall Shearin