Prologis increases stake in PEPR ahead of full offer

Prologis has increased its stake in Euronext-listed fund Prologis European Properties (PEPR) ahead of launching a mandatory tender offer for all the outstanding units in the fund it does not already own. Earlier Prologis rejected the APG-led EUR 6 per unit offer and has now counter-attacked with its own bid pitched at EUR 6.10 per unit.

In a statement on Thursday, Prologis announced that it had purchased 11 million ordinary units in PEPR from a major institutional investor, bringing Prologis' ownership in PEPR to around 38%. The move by the Denver-based global provider of distribution facilities comes in response to an indicative takeover offer by an 'Investors Group' led by APG, the Dutch pension group and investor in PEPR. The other members of the ‘Investors Group’ are Sydney-listed Goodman Group and other 'like-minded' investors.

APG and Goodman said on Thursday that they noted the Prologis offer with interest. 'APG and Goodman await further details of Prologis' offer and will make a more detailed announcement thereafter', they said in a statement.

One of the key bones of contention between APG and PEPR is PEPR's management contract with Prologis. Under terms of the indicative proposal by APG and Goodman, PEPR's management rights would be transferred from Prologis to Goodman.

Prologis said on Thursday it will offer each PEPR unitholder EUR 6.10 per unit in cash, which represents a 22% premium over the closing price on Euronext of PEPR shares on 12 April 12, 2011 and a 27% premium over the volume weighted average price in the preceding six months.

Separately, ProLogis will offer each PEPR convertible preferred unitholder an 'appropriate' cash consideration, which will be further detailed in the offer document. The offer has no material conditions to close. Prologis said that it expected the tender period will be open for two to four weeks.

JP Morgan is acting as financial adviser to Prologis.