Prologis, Inc. (NYSE: PLD) said Oct. 27 that it will acquire Liberty Property Trust (NYSE: LPT) in an all-stock transaction for approximately $12.6 billion, including debt.
Under the terms of the agreement, Liberty shareholders will receive 0.675 of a Prologis share for each Liberty share they own. The transaction is currently expected to close in the first quarter of 2020.
Prologis’ last major acquisition was in 2018, when it paid $8.5 billion, including debt, for DCT Industrial Trust Inc.
“Liberty’s logistics assets are highly complementary to our U.S. portfolio and this acquisition increases our holdings and growth potential in several key markets,” said Prologis Chairman and CEO Hamid Moghadam. “The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies.”
Under the terms of the deal, Prologis will acquire: a 107-million-square-foot logistics operating portfolio; 5.1 million square feet of logistics development in progress; 1,684 acres of land for future logistics development; and a 4.9-million-square-foot office operating and development portfolio.
Bill Hankowsky, Liberty chairman and CEO, said joining the two platforms “will further the industry’s ability to support the nation’s supply chain and enhance value creation for our combined shareholders.”
According to Bloomberg Intelligence analyst Lindsay Dutch, “the deal solidifies that the quickest way to increase exposure to fast-rent-growing warehouses is through M&A.”
Prologis said it plans to dispose of approximately $3.5 billion of assets. This includes $2.8 billion of non-strategic logistics properties and $700 million of office properties.
The transaction deepens Prologis’ presence in target markets such as Lehigh Valley, Pennsylvania; Chicago; Houston; Central Pennsylvania; New Jersey; and Southern California.
On a conference call, Prologis CIO Eugene Reilly said the company has been trying to expand in the Lehigh Valley “for years,” noting that the vacancy rate in that region is under 4%. As for Houston, “we love this market’s long-term prospects,” he added.
Prologis said the transaction is anticipated to create immediate cost synergies of approximately $120 million, with future synergies potentially generating approximately $60 million in annual savings.