Denver-based ProLogis has been forced into bidding for the whole of ProLogis European Properties (PEPR), it admitted today.
In response to an indicative €1.2 billion offer made by a consortium led by PEPR shareholder, Algemene Pensioen Groep (APG), ProLogis has purchased an 11 million-share block in Europe’s biggest owner of logistics property from an undisclosed major institutional investor. The move has taken ProLogis' stake to 38 percent, thus triggering a mandatory offer to buy the whole company.
In a statement, ProLogis said its decision to make an offer for the units represented its response to the desire of “certain unitholders to monetise their investment”. The offer it will make is pitched at €6.10 per unit, which is higher than the €6 per share indicative proposal made by the APG-led consortium, which includes Australian logistics operator Goodman Group. That consortium wanted to force PEPR to open its books to allow a privatisation proposal to be made, but its offer already has been rejected.
ProLogis said offering €6.10 per share represented a 22 percent premium to PEPR’s closing share price on Tuesday, when the APG-led consortium announced its indicative offer. It also is a 27 percent premium to the average share price over the last six months, it added.
“The ProLogis offer provides PEPR unitholders an opportunity to sell their units at an attractive price and eliminates the instability and uncertainty created by the non-definitive and highly conditional proposal for ProLogis' stake in PEPR by Algemene Pensioen Groep and Goodman Group,” ProLogis said in its statement. “Although the Investor Group has not made an offer for all PEPR units, its recent press release stated that a price of €6 per unit would represent ‘a compelling value proposition' for all unitholders.”
“ProLogis has taken this immediate action for the benefit of all unitholders following the investor group's indicative non-binding proposal, which also included several conditions, including that ProLogis sell its ownership stake in PEPR and relinquish its management contract to Goodman, a competitor of ProLogis in Europe. ProLogis announced earlier this week that it has no intention or desire to sell its interest in PEPR, nor does it intend to sell the management agreement. It said the value proposition of PEPR has always been inextricably linked to ProLogis' active ownership and management.”
Chief executive Walter Rakowich said: “Under ProLogis' management, PEPR's occupancy has consistently outperformed the broader pan-European market by 300-500 basis points. Additionally, over the last two years, ProLogis has managed the refinancing or repayment of over €1.3 billion of debt on behalf of PEPR.”