SAN FRANCISCO-Earlier in the week, rumors had been circulating about a possible merger between San Francisco-based AMB Property Corp. and Denver-based ProLogis. As GlobeSt.com earlier reported, both companies have confirmed that they are in discussions to merge, but tell GlobeSt.com that they cannot comment further at this time; however industry sources have no trouble detailing how colossal this merger could be.
“This would be a significant event and would create real scale for the combined entity,” Craig Meyer, managing director and head of industrial of the Americas at Jones Lang LaSalle, tells GlobeSt.com. “For industrial tenants the combined company might offer some portfolio advantages relative to flexibility across geographies or expansion/contraction issues.”
The two companies are dubbing it a “merger of equals.” John Magness of Hillwood Properties tells GlobeSt.com that on the one hand, “it is like Coke acquiring Pepsi.” He points out that the merger would “combine the capital strength and breadth of ProLogis with the core market focus and disciplined management of AMB.”
Although neither company will be sharing news until a merger “is done or falls through,” according to a prepared statement, if the talks succeeed the resultant company would be sitting on a portfolio of nearly 600 million square feet of international industrial space. The combined market cap of the two firms, according to the Wall Street Journal, is $13.9 billion.
Magness tells GlobeSt.com that the merger would also create opportunities for companies like Hillwood Properties, for example. “It should produce a lot of opportunities for companies with much lower overhead, lower operating costs, more nimble capital.”
Kurt Strasmann, managing director in Voit Real Estate Services’ Anaheim, CA-office tells GlobeSt.com that a merger would be pretty interesting because both companies are gorillas on the industrial side, but really have different strategies. “AMB was very laser focused on airports and seaports, whereas ProLogis was big into distribution centers throughout the nation,” he says. “If they merge, there would be no second place.”
He continues to point out that with the two company’s existing tenant base, what the merger would do is that “it would allow them to really be able to help service those existing companies in multiple markets and expand that base dramatically, so it would be huge.”
Not only would it be huge for the two companies involved, he says, but it would be huge for the clients as well. “What it does for all their corporate service clients is that as they gain contracts in multiple areas, AMB and ProLogis are already in the areas they want to be in,” he says. “They are in all those locations already combined, and so all of a sudden, it makes for a very seamless process for their clients. It would benefit their clients tremendously.”
Due to the markets that the two companies are in when combined, they would certainly be a trendsetter on pricing on the industrial side, explains Strasmann. “What it is going to do for the valuation on the assets in those local markets, is that the owners will benefits. They will hold up rates and pricing, which will hold up the local guys, who will have value appreciation because of that.”
GlobeSt.com will continue to follow the merger talks as they progress.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
