Prologis to merge with Duke Realty in an all-stock deal

Prolgis Inc (NYSE: PLD) announced that it’s entering a definitive merger agreement with Duke Realty worth roughly $26 billion in an all-stock transaction, with the assumption of debt included. Both Prologis’ and Duke Realty’s board of directors have unanimously approved the deal.

With this deal, Prologis will add high-quality properties to its catalog in key geographic areas like New Jersey, Southern California, Dallas, Chicago, Atlanta, and South Florida.

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Management Statements

Prologis Co-Founder, Chief Executive Officer, and Chairman, Hamid R. Moghadam, said:

We have admired the disciplined repositioning strategy the Duke Realty team has completed over the last decade. They have built an exceptional portfolio in the U.S. located in geographies we believe will outperform in the future. That will be fueled by Prologis’ proven track record as a value creator in the logistics space.

Duke Realty Chief Executive Officer and Chairman, Jim Connor, said:

We have always respected Prologis, and after a deliberate and comprehensive evaluation of the transaction and the improved offer, we are excited to bring together our two complementary businesses. Together, we will be able to accelerate the potential of our business and better serve tenants and partners.

Details of the deal

This merger agreement is expected to give rise to instant accretion of roughly $310 to $370 million from operating leverage, administrative cost savings, and mark-to-market changes on debt and leases. In the first year, the deal should increase the company’s annual core funds from business operations.

Furthermore, future synergies can potentially generate roughly $375 to $400 million in value creation and annual earnings, including Essentials income and incremental property cash flow worth $70 to $90 million.

According to the agreement, stockholders of Duke Realty will get 0.475x worth of a Prologis Inc share for each share they own in Duke Realty. The deal, which is expected to conclude by the fourth quarter of the 2022 fiscal year, is subject to shareholder approval and the other necessary customary closing conditions.