Warehouse behemoth Prologis Inc. has announced its plans to acquire its rival Duke Realty Corporation in an all-paper deal valued at approximately USD 26 billion, including debt, further reflecting the booming industrial real estate market.
It is worth noting that the previous buyout offers worth USD 24 billion from Prologis was rejected by Duke Realty, deeming the proposal as insufficient. On Friday, the real estate investment firm had an industry net worth of approximately USD 19.1 billion, while its shares have plunged by 24%, Prologis’ stock slumped by over 30%.
According to the agreement, each shareholder of Duke Realty will receive a 0.475 Prologis share in the exchange for every share they hold of Duke Realty. The transaction has received the unanimous approval of the boards of directors of both firms which is anticipated to be completed in the fourth quarter of this year.
Meanwhile, on Monday, Prologis with a market valuation of about USD 87 billion, saw its shares slump 6% while Duke Realty’s hiked by more than 2%. Owners of industrial real estate fear that demand for warehouse property might be cooling down as merchants of e-commerce activity decline from a COVID-19 pandemic peak.
According to sources, Amazon is preparing to either terminate or re-negotiate some of the terms of its leases as well as planning to sublet at least 10 million square feet of its warehouse space, which alarmed the investors that have been on a tear recently.
Companies such as Walmart Inc., Target Corporation, and Dick’s Sporting Goods Inc. have been exploring ways to use their stores as micro fulfillment centers that are located nearby to the homes of their customers.
It is also worth mentioning that FedEx, Home Depot, and Amazon utilize warehouses and distribution centers owned by Prologis that encompass about 1 billion square feet. In 19 prominent logistical areas in the U.S., Duke Realty owns and manages over 160 million square feet of industrial real estate.