(Bloomberg) -- Prologis Inc. is buying Liberty Property Trust in an all-stock transaction valued at $9.7 billion, extending its reach in markets such as Chicago, Houston and Southern California.Including debt, the deal is valued at $12.6 billion, the companies said in a statement. The transaction gives Liberty stakeholders 0.675 Prologis share for each Liberty share they own, a premium of about 21% based on Friday’s closing prices.Warehouses and logistics facilities -- Liberty’s specialty -- have become a hot part of the real estate market as more shopping moves online and demand for the space increases. Blackstone extended its bet on e-commerce last month, agreeing to buy Colony Capital Inc.’s warehouse unit for $5.9 billion. And Prologis itself has been a big acquirer of rivals in recent years.“The deal solidifies that the quickest way to increase exposure to fast-rent-growing warehouses is through M&A,” said Bloomberg Intelligence analyst Lindsay Dutch. The pricing is similar to Prologis’s purchase of DCT Industrial Trust and its pending takeover of Industrial Property Trust, she said, adding that Liberty would still be the biggest of the three transactions.The acquisition gives Prologis a portfolio of 107 million square feet of logistics properties that’s owned or managed, as well as buildings under construction and land for future development. It also includes 4.9 million square feet of office space.“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 Chief Executive Hamid R. Moghadam said in the statement. “The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies.”Prologis plans to dispose of approximately $3.5 billion of assets on a pro rata share basis, including $2.8 billion of logistics properties and $700 million of office properties.Liberty shares have risen 21% this year, compared with the 55% jump in Prologis shares. An S&P index tracking 32 real estate companies climbed 27%. Prologis is trading at 40 times estimated earnings, compared with a multiple of 35 for Liberty.The transaction is expected close in the first quarter of 2020. Bank of America Corp. and Morgan Stanley advised Prologis on the transaction, while Goldman Sachs Group Inc. and Citigroup Inc. represented Liberty.(Updates with analyst comment in fourth paragraph.)To contact the reporter on this story: Meghan Genovese in New York at mgenovese@bloomberg.netTo contact the editors responsible for this story: Craig Giammona at cgiammona@bloomberg.net, Linus Chua, Kevin MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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