Shares of Liberty Property Trust (NYSE: LPT) rose more than 15% on Monday after the industrial REIT agreed to be acquired by Prologis (NYSE: PLD) in a $12.6 billion deal. The deal values Liberty Property within range of the $60-per-share price that activist Land & Buildings Investment Management suggested the company could be sold for back in September.
Prologis, one of the world's largest owners of warehouse properties, announced before markets opened on Monday that it had agreed to exchange 0.675 of its shares for each share of Liberty. The combination would create a warehousing and logistics leader, according to the companies, and deepen Prologis' presence in Pennsylvania, Chicago, Houston, and Southern California.
"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," Prologis Chairman and CEO Hamid R. Moghadam said in a statement. "The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies."
The deal, which includes the assumption of about $3 billion in debt, is expected to close next year pending regulatory and shareholder review. Prologis said it intends to sell about $3.5 billion worth of assets, including certain "non-strategic" logistics properties and a handful of office properties, once the deal is completed.
This is the second major acquisition of warehousing assets announced this month, following Blackstone's planned $5.9 billion purchase of the warehouse unit of Colony Capital. A bull would likely view the deals as a sign of the increasing importance of one-day shipping and just-in-time inventory. A bear might argue large-scale infrastructure consolidation can be a sign we are late in the cycle and a recession is looming.
This offer has pushed the stock to a 52-week high and puts it within range of what Land & Buildings had targeted, so it seems likely to be completed as planned.
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