EUROPE - The management of ProLogis European Properties (PEPR) have accepted an offer to acquire their shares for €6.20 per unit, which will result in Prologis owning close to 63% of voting rights and 91% of preferred units in the listed real estate fund.

ProLogis improved its offer to buy all remaining shares in PEPR, which it originally floated on the Dutch stock market in 2006, from €6.10 per unit in a bid to head off an earlier buyout attempt by a consortium of investors led by APG and Goodman Group.

PEPR management rejected ProLogis' initial offer, but have accepted the new one, despite it still not reflecting "PEPR's full value potential".

The move appears to be chiefly driven by the decision of APG/Goodman and another major shareholder, the Government of Singapore Investment Corporation (GIC), to accept the improved offer, which will see ProLogis take a majority stake of close to 60% in PEPR.

The management company of PEPR said in a statement that "whilst recognising that the offer contains an improvement to the initial price in the offer, [it] continues to believe that PEPR's full value potential has not been reflected in the offer for holders of either the ordinary or the convertible preferred units and accordingly, considers ProLogis' offer [...] to be inadequate from a financial point of view".

PEPR added: "Nonetheless, the management company notes that APG and GIC, respectively PEPR's second and third largest unit holders and both long-term investors in PEPR, have agreed to sell their entire stakes at the revised offer price."

The management company further notes that this and further purchases in the open market raises the ProLogis Group's ownership to at least 59.91% of the ordinary units and 90.62% of the convertible preferred units.

As a consequence, the ProLogis Group now holds in excess of 50% of the ordinary units and is closer to holding 67% of the ordinary units.

It said further: "The independent members of the PEPR board and the managers of the management company intend to accept the offer in respect of their own holdings of vested ordinary units where there are no individual adverse tax implications.

"The managers of the management company who hold convertible preferred units do not intend to accept the offer with regard to those units."

Convertible preferred shares are hybrid stocks that carry no voting rights but often have an option to be converted into common stock at a given date.

Peter Cassells, chief executive at PEPR, said: "In reaching our conclusion, we have continued to consult with the independent members of the PEPR board and have received updated external legal and financial advice.

"While the revised offer still does not reflect PEPR's full value potential, unit holders should carefully evaluate their alternatives in light of the further reduced liquidity of the units."