Prologis, Duke Realty Agree to $26B Acquisition

After several weeks of silence since Prologis first made its attempts to acquire Duke Realty public—a nearly $24 billion all-stock bid which the smaller rival rejected, the two REIT have come to an agreement: On Monday morning they announced they have entered into a definitive merger agreement in which Prologis will acquire Duke Realty in an all-stock transaction, valued at approximately $26 billion, including the assumption of debt. The board of directors for Prologis and Duke Realty have unanimously approved the transaction.

Nothing was mentioned about what must have been fierce behind-the-scenes negotiations. Instead, Prologis Co-founder, CEO and Chairman Hamid R. Moghadam said in prepared remarks that “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 US located in geographies we believe will outperform in the future.”

 Prologis is gaining properties in key geographies, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta, the company noted. 

 All told, the acquisition on an owned and managed basis consists of 153 million square feet of operating properties in 19 major US logistics geographies and 11 million square feet of development in progress, which is about $1.6 billion in total expected investment. There is also 1,228 acres of land owned and under option with a build-out of approximately 21 million square feet.

 Prologis plans to hold approximately 94% of the Duke Realty’s assets and exit one market.

 “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,” said Duke Realty Chairman and CEO Jim Connor in prepared remarks.  

Under the terms of the agreement, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share they own. The transaction, which is currently expected to close in the fourth quarter of 2022, is subject to the approval of Prologis and Duke Realty shareholders and other customary closing conditions.

Besides an increased portfolio, the acquisition also promises significant synergies and administrative cost savings, Prologis said.

 Goldman Sachs Group, Inc. and Citigroup are serving as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Prologis. Morgan Stanley & Co. LLC is serving as the lead financial advisor and Hogan Lovells US LLP is serving as legal advisor to Duke Realty. J.P. Morgan Securities LLC and Alston & Bird LLP are also serving as financial and legal advisors, respectively, to Duke Realty.