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Prologis, Inc. today announced that the two companies have entered into a definitive merger agreement by which Prologis will acquire DCT for
$8.4 billion in a stock-for-stock transaction, including the assumption of debt. The boards of directors of both companies have
unanimously approved the transaction.
“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,” said Prologis chairman and chief executive officer Hamid R. Moghadam. “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.”
The 71 million square foot operating portfolio deepens Prologis’ presence in high-growth markets including Southern California, the
San Francisco Bay Area, New York/New Jersey, Seattle and South Florida.
The acquisition also includes:
7.1 million square feet of development, redevelopment and value-added projects
195 acres of land in pre-development, predominantly in Seattle, Atlanta, South Florida and Southern California with build-out
potential of over 2.9 million square feet
215 acres of land under contract or option, predominately in New York/New Jersey, Southern California, Northern California and
Chicago, with a build-out potential of over 3.3 million square feet
“This transaction underscores the exceptional quality of DCT’s portfolio, platform and customer relationships, which our talented team
has worked hard to create,” said DCT Industrial president and chief executive officer Philip L. Hawkins. “Our shared commitment to
quality, exceeding expectations and enhancing customer experience makes this a perfect combination.”
“DCT’s team is as good as it gets, and we expect a number to join us to help manage the portfolio, execute on capital deployment
activities and make long-term contributions to the Prologis platform,” said Prologis chief executive officer for the Americas Eugene F.
Reilly. “This deal also diversifies our customer roster through the addition of some 500 new relationships.”
The transaction is anticipated to create substantial synergies, including near-term synergies of approximately $80 million in corporate
general and administrative cost savings, operating leverage, interest expense and lease adjustments, which are forecast to increase
annual stabilized core funds from operations* (Core FFO) per share by $0.06-$0.08. A combination of revenue synergies and
incremental development volume has the potential to generate $40 million of additional annual revenue and development profit in
the future.
“This all-stock transaction enables us to maintain our strong balance sheet and significant financial flexibility,” said Prologis chief
financial officer Thomas S. Olinger. “In addition, the transaction increases our U.S. dollar net equity and drives additional core FFO
growth.”
Under the terms of the agreement, DCT shareholders will receive 1.02 Prologis shares for each DCT share they own. The transaction,
which is currently expected to close in the third quarter of 2018, is subject to the approval of DCT stockholders and other customary
closing conditions. At closing, it is anticipated that Philip L. Hawkins will join the Prologis board of directors.
J.P. Morgan is acting as exclusive financial advisor and Mayer Brown LLP is serving as legal advisor to Prologis. BofA Merrill Lynch is
acting as exclusive financial advisor and Goodwin Procter LLP is serving as legal advisor to DCT.
Source : Company