APG to sell its PEPR stake

Algemene Pensioen Groep (APG) has agreed to sell its entire 12 percent stake in ProLogis European Properties (PEPR) to ProLogis, bringing to a close a contentious bidding war that has consumed the better part of four weeks.

APG said it has agreed to sell all of its ordinary and convertible preferred units in PEPR for a consideration of €6.20 per unit, plus an amount equal to any accrued and unpaid preferred dividend in respect of the preferred units sold by APG. Based on 190.5 million total shares of PEPR, the Dutch pension manager should receive in excess of €141.73 million for its stake.
 
The decision by APG to sell its stake in PEPR and abandon its bid to take the company private comes in the wake of Denver-based ProLogis – PEPR’s former parent and its current property manager – sweetening its offer for all the outstanding shares of PEPR that it does not already own. The industrial giant increased its offer price from €6.10 per unit to €6.20 per unit on Friday afternoon and extended the end date of the acceptance period to May 18. Furthermore, it noted that unitholders who tendered their units prior to the increased bid will be paid the higher offer price at the closing of the acceptance period.

APG said in a statement that, given the history of PEPR as an externally managed listed fund, it is pleased with the outcome and believes that accepting ProLogis’ revised cash offer is in the best interest of its clients. APG also confirmed that, as a result of accepting ProLogis’ sweetened offer, the APG and Goodman Group-led consortium will not be submitting any further proposals to acquire PEPR units.

Meanwhile, the sweetened bid also enticed a previously uninvolved investor – an affiliate of the Government of Singapore Investment Corporation (GSIC) – to take ProLogis up on its offer. Although the exact size of the GSIC affiliate’s stake is unknown, it is believe to be around 10 percent, valuing that sale at about €118.1 million. Indeed, ProLogis noted that the two purchases would increase its ownership of PEPR from roughly 38 percent to approximately 60 percent.

“At the increased price, two of PEPR's significant investors today have chosen to sell their units,” said Walter Rakowich, chief executive officer of ProLogis, in a statement. “ProLogis remains committed to its European platform and strongly believes the successful completion of its tender offer is in the best interests of both PEPR and ProLogis investors and provides all PEPR unitholders with substantial, certain and immediate value.”

PEPR, one of Europe’s biggest owners of distribution and logistics facilities, was effectively put into play last month by APG, which wanted to make a €6 per unit offer to take the company private because of corporate governance concerns and a persistent gap between the company’s share price and net asset value. However, its indicative offer was rejected and immediately prompted ProLogis to boost its holdings from 33 percent to 38 percent, triggering a mandatory takeover approach under NYSE Euronext rules. ProLogis offered €6.10 per unit, a price that was rejected by at least one investor as inadequate and ultimately led to the management of PEPR rejecting the proposal as well.