Logistics real estate investment trust Prologis is widening its US presence by acquiring smaller listed peer DCT Industrial Trust for $8.4bn (€7bn).
The two companies said they have entered into a ”definitive merger agreement” by which Prologis will acquire DCT for $8.4bn in a stock-for-stock transaction, including the assumption of debt.
As part of the deal, DCT shareholders will receive 1.02 Prologis shares for each DCT share they own. The exchange ratio represents almost $67.91 for each DCT share or around 15.6% premium to the share’s last closing price of $58.75.
Prologis closed with a market capitalisation of $35.11bn.
Prologis chairman and chief executive officer Hamid R. Moghadam, said: “For some time, we have considered DCT’s realigned portfolio to be the most complementary to our own in terms of product quality, market position and growth potential.
“This high level of strategic fit will allow us to capture significant scale economies immediately. In addition, our current platform initiatives, particularly in the areas of advanced analytics, customer experience and procurement and ancillary revenues, will enable us to extract significant upside from the combined portfolios.”
Prologis said the 71m sqft operating portfolio deepens its presence in high-growth markets including Southern California, the San Francisco Bay Area, New York/New Jersey, Seattle and South Florida.
Acquiring DCT will also add 7.1m sqft of development, redevelopment and value-added projects and 195 acres of land in pre-development, predominantly in Seattle, Atlanta, South Florida and Southern California with build-out potential of over 2.9m sqft.
DCT Industrial president and chief executive officer Philip L. Hawkins, said: “This transaction underscores the exceptional quality of DCT’s portfolio, platform and customer relationships, which our talented team has worked hard to create.
Prologis chief financial officer Thomas S. Olinger, said: ”This all-stock transaction enables us to maintain our strong balance sheet and significant financial flexibility.
”In addition, the transaction increases our US dollar net equity and drives additional core funds from operations growth.”
The deal, which is expected to close in the third quarter of 2018, is subject to the approval by DCT stockholders.
In 2011, ProLogis and AMB Property Corporation merged to create the world’s largest owner, operator and developer of industrial real estate assets.