AMB, ProLogis complete merger

AMB Property and ProLogis have sealed their deal to merge, completing one of the few mergers of US public property companies to have occurred this cycle.

In an announcement today, the two companies said their merger would lead to a single mega-logistics and distribution property company with combined assets of around $46 billion. Furthermore, they said the merger would deliver approximately $80 million of savings per year from the end of 2012.

The new company will trade on the New York Stock Exchange under the name ProLogis, with chairman and co-chief executive Hamid Moghadam proclaiming it had a “clear strategy to pursue growth opportunities” around the world. Former ProLogis common shareholders now hold around 60 percent of the combined company's stock, leaving former AMB shareholders with the remaining 40 percent.

In a statement, the companies said the merger would create synergies, be immediately accretive and would be able to demonstrate improved cost of capital with “greater financial flexibility”, adding that the expanded footprint should generate increased revenue also. The new business has a portfolio comprising approximately 600 million square feet of distribution space across 22 countries. Approximately 93 percent of the combined assets were leased as of the end of last year.

Former AMB chief executive Moghadam is sharing the running of the company with ProLogis chief executive Walter Rakowich. However, Rakowich is retiring at the end of 2012, as the companies previously have stated. Until then, Moghadam will focus on shaping the company's strategy and capital markets business, while Rakowich will focus on operations, specifically the integration of the two platforms.

The company's corporate headquarters will be in San Francisco where AMB hails from, and the company's operations headquarters will be in ProLogis’ home city of Denver. 

Though public companies, both manage a range if different property funds on behalf of third-party institutional investors. AMB, for example, recently has established a joint venture with partners including the Abu Dhabi Investment Authority to create HIP China Logistics Investments Limited.

The merger follows a particularly tumultuously few years for ProLogis, which was forced into a huge restructuring and market retrenchment after the company took on too much debt in order to expand into new markets.