GMG Goodman Group

U.S. industrial real-estate giant ProLogis (PLD) said Thursday it plans to make an offer for ProLogis European Properties (PEPR.AE) that values the Euronext-listed warehouses developer at about EUR1.2 billion ($1.73 billion), trumping a rival group's bid.

The Denver-based company said it will launch a takeover offer for ProLogis European worth EUR6.10 per share, after it raised its stake in the biggest owner of warehouses in Europe to about 38% by buying around 11 million ordinary shares from a major institutional investor.

The offer represents a 22% premium over the closing share price April 12 when Australian property investor Goodman Group (GMG.AU) and Dutch pension-fund asset manager APG Algemene Pensioen Groep NV had a joint takeover bid for ProLogis European rejected.

ProLogis Chief Executive Walter Rakowich told Dow Jones Newswires that its offer was "a compelling proposition" that would "provide liquidity to all shareholders that want it."

ProLogis said its offer is at an attractive price and eliminates instability and uncertainty created by the rival group's indicative offer for its own stake, which previously stood at 33.1%. Goodman and APG were prepared to offer ProLogis EUR6 per share, which valued ProLogis European at about EUR1.1 billion.

Rakowich added the company was making "a concrete offer with no material contingencies" and said its rival bidders had presented a non-definitive and highly conditional proposal.

The bid from ProLogis was likely to be successful according to Martijn ter Laak, a real estate analyst at Radobank. He said the offer created an exit opportunity for APG, which it probably would consider fair value, and means a counterbid in conjunction with Goodman was very unlikely.

Goodman's status as a competitor in Europe also means it wouldn't make strategic sense for ProLogis to sell its management stake in ProLogis European, ter Laak said. Radobank increased its ProLogis Europe price target to EUR6.10, the level of the new bid, and reiterated its hold rating.

Investors and analysts have complained about a weak corporate-governance structure at ProLogis European that puts small shareholders at a significant disadvantage. Investors with less than a 20% holding have no powers to call general meetings or make proposals to the board. ProLogis can't be replaced as manager before 2016 and the company has reaffirmed that it plans to retain both its ownership in and management deal with ProLogis European.

ProLogis European had a portfolio with a market value of EUR2.8 billion at the turn of the year. It consisted of 232 buildings across 11 countries, covered 4.9 million square meters, and had an occupancy level of 94.5%. At 1215 GMT, its shares traded up 7.8% at EUR6.20.

The deal activity around the company comes as ProLogis and U.S. rival AMB Property Corp. enter the final stages of their effort to close a $14 billion merger that would form a global real-estate powerhouse with gross assets of $46 billion.

-By Michael Haddon, Dow Jones Newswires; 4420-7842-9289; michael.haddon@dowjones.com

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