Prologis has made public a letter it sent to Duke Realty CEO James B. Connor, proposing to acquire Duke Realty in an all-stock transaction that is worth nearly $24 billion, per the Wall Streett Journal's calculations.
Under the terms of the proposal, Duke Realty stockholders would receive 0.466 shares of Prologis common stock for each share of Duke Realty common stock they own. Prologis' proposal is valued at $61.68 per Duke Realty share, based on Prologis' closing price on May 9, 2022, and represents a premium of 29% to Duke Realty's closing price on the same date.
"We are confident that the proposed combination will be a win-win for our respective shareholders," said Prologis CEO and co-founder Hamid R. Moghadam. "Prologis has a proven track record serving as a leader and innovator in our industry. We have no doubt that Duke Realty's shareholders would similarly benefit from long-term value created by the combination of our companies."
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Prologis has been vying to acquire its smaller rival for several months with varying offers, but Duke Realty apparently dismissed them.
Moghadam wrote that "in previous communications, you have contended that the premium is not enough to engage seriously with us. Your shareholders should be aware that the immediate value of our offer has increased by approximately 10% since we began our dialogue more than five months ago."
Following personal dialogue between the executive teams, Prologis first sent a letter to Duke Realty on November 29, 2021 regarding a potential transaction that represented a 20% premium to Duke Realty's stock price at the time. On May 3, 2022, Prologis modestly increased the proposed exchange ratio – representing a 34% premium to Duke Realty's stock price at the time– in a final attempt to engage privately to reach agreement on a mutually beneficial transaction, the REIT said. Duke Realty rejected the Prologis proposal that same evening.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
