Prologis (PLD) to take over Duke Realty in US$26 bn deal

Highlights:

• Prologis Inc. (PLD) to buy Duke Realty Corp. (NYSE: DRE) for US$26 billion.
• The deal will boost Prologis to expand its warehouses and distribution centers.
• Prologis shares were down 6.39% to US$109.745 at 2:45 PM ET on June 13.

Real estate investment company Prologis Inc. (NYSE: PLD) is all set to buy Duke Realty Corp. (NYSE: DRE), a leading US industrial REIT, for US$26 billion.

Prologis, headquartered in San Francisco, California, invests in warehouses and is the world’s largest warehouse operator. The deal will allow the company to push more into the e-commerce sector, which is going through a slowdown.

Duke Realty, on the other hand, delivers excellence in logistics real estate in faraway locations, be it new or existing facilities.

The all-stock deal, which includes debt, unveiled on Monday, is the result of several months of negotiation between the companies, including Duke Realty’s initial rebuffing of a US$24 billion offer last month. The deal is expected to be closed later this. 

It will augment Prologis’s already vast footprint of warehouses and distribution centers in the online shopping ecosystem.

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The deal to help Prologis augment its footprint

Prologis already has a one-billion-square-foot network of industrial facilities around the world. These facilities store, process, and ship online orders for companies, including some big names like Amazon.com Inc. (Nasdaq: AMZN) and FedEx Corp. (NYSE: FDX), among others. 

After the deal, Prologis will add another 160 million square feet of space in 19 major US logistics markets from Duke Realty. 

The deal comes when investors have started worrying that the industrial real-estate market is showing signs of being overbuilt. The e-commerce sector is also amid a slowdown precipitated by breakneck growth during the pandemic.

The acquisition is sending out a strong message by Prologis as many online operators are rethinking downsizing the industrial space that spawned in the last two years. 

Bottom line:

As for the deal, the boards of both the companies, Prologis, and Duke Realty, have now unanimously given the nod to a transaction in which Duke Realty shareholders would receive 0.475 times a Prologis share for each Duke Realty share they own.