GLOBAL - ProLogis and AMB Property Corporation have confirmed they will enter into a "merger of equals" to create the world's largest owner, operator and developer of industrial real estate assets.

Both companies have substantial portfolios in North America, western Europe and Japan.

ProLogis is well established in the UK and central and eastern Europe, while AMB has a significant presence in China and Brazil.

It is estimated that gross assets owned and managed by the new entity will equal roughly $46bn (€33.6bn) and represent approximately 600m square feet of modern distribution space.

Hamid Moghadam, chief executive at AMB, said: "This merger is about two great companies coming together to create a stronger platform for sustainable value creation and growth.

"By joining forces, this merger will create a company positioned to be the leading global provider of logistics real estate - a blue-chip REIT."

The new company will retain the name ProLogis and be converted into an umbrella partnership real estate investment trust (UPREIT), allowing the merger to take place as a tax-free transaction.

Each ProLogis common share will be converted into 0.4464 of a newly issued AMB common share, and the UPREIT is expected to have an equity market capitalisation of approximately $14bn and a total market capitalisation in excess of $24bn.

"The combined company will be a global player active on four continents," Moghadam added. "This enhanced platform will enable us to better serve the needs of multi-market customers and provide them with both existing world-class facilities and unmatched development capabilities.

"The combined company will also be well-positioned to create more opportunities and value for both our shareholders and fund investors."

Walter Rakowich, chief executive at ProLogis, said: "The merger of these two leading industrial platforms will advance a number of priorities already underway at each company.

"These priorities include improving efficiency and reducing costs by better aligning our portfolios through the reduction of non-core assets and the recycling of capital into higher growth opportunities; increasing asset utilisation by stabilising the operating portfolio; leasing up the development portfolio; and monetising the land bank."

Moghadam and Rakowich will serve as co-chief executives until 31 December 2012, after which Rakowich will retire and Moghadam will become sole head of the combined company.

Moghadam will also be chairman of the board of the combined company and be primarily responsible for shaping the company's vision, strategy and private capital franchise.
Rakowich will be principally responsible for operations, the integration of the two platforms and optimising the merger synergies.

The merger is expected to take place during the second quarter of 2011.

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