The boards of ProLogis and Catellus Development have approved the acquisition of all Catellus’s outstanding common stock by ProLogis.The deal is valued at approximately $4.9 billion, including assumed liabilities and transaction costs.
The transaction is expected to be accretive to ProLogis’ estimated 2006 Funds From Operations by approximately 3% to 5%. Among the key accretion drivers are ProLogis’ integration of Catellus’ development operations into ProLogis’ fund management business, as well as significant cost savings in general and administrative expenses.
Under the terms of the agreement, 65% of the Catellus shares will be exchanged for ProLogis common shares and 35% of the Catellus shares will be exchanged for cash. As a result, Catellus stockholder elections will be prorated such that the merger consideration is fixed at 56.7 million ProLogis shares and $1.255 billion in cash, or $11.83 per Catellus share. The stock component of the consideration is expected to be tax-free to Catellus stockholders.
ProLogis CEO Jeffrey H. Schwartz stated, “This transaction dramatically changes the landscape of the U.S. industrial real estate market by consolidating two of the largest industrial property developers in North America. The addition of Ted Antenucci, president of Catellus Commercial Development, and his team of experienced development professionals will enhance ProLogis’ North American development capabilities and, in turn, our growth potential and shareholder value.
“The transaction also supports strong development growth with Catellus’ quality land bank, including almost 30 million buildable square feet in the top six distribution markets,” added Schwartz. “In the U.S., Catellus’ operating portfolio is a strong complement to our properties, being quite new with an average age of only 7.2 years and situated in outstanding locations in the premier distribution markets. As we integrate this acquisition, we will also continue to execute and build upon the international aspects of our strategy that position ProLogis to capitalize on the rapid growth in distribution opportunities worldwide.”
Strong customer synergies also are expected to drive ProLogis’ continued expansion. Catellus customers are usually large companies looking for newer, functional distribution centers, consistent with ProLogis’ targeted Focus 500 customers. The combined company will operate 2,250 distribution facilities in North America, Europe and Asia.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
