EUROPE - ProLogis has sought to prevent a shareholder-backed takeover of ProLogis European Properties (PEPR) by increasing its stake in the listed real estate fund and offering to buy the outstanding units at a premium of more than 20%.
The move to take the fund private comes a day after Dutch asset manager Algemene Pensioen Groep (APG) called on unit holders of PEPR to back its proposed takeover together with Goodman Group.
On Tuesday, ProLogis rejected the informal, non-binding, indicative proposal by APG and Goodman, which proposed acquiring all PEPR units in a cash deal valued at €6 per share.
ProLogis has now offered €6.10 for all remaining shares in PEPR, having already increased its stake in the fund from 33% to 38% by purchasing approximately 11m ordinary units from an unnamed institutional investor.
In a statement, ProLogis said it would now "launch a mandatory tender offer to acquire any or all of the outstanding units and convertible preferred units it does not currently own in PEPR, subject to approval of the offer document by the Luxembourg regulator".
ProLogis said the price it was offering, which is higher than that offered by APG and Goodman, represented a 22% premium over the unaffected closing price on Euronext Amsterdam on April 12, and a 27% premium over the volume-weighted average price in the preceding six months.
The firm stated: "The ProLogis offer provides PEPR unit holders an opportunity to sell their units at an attractive price and eliminates the instability and uncertainty created by the non-definitive and highly conditional proposal for ProLogis' stake in PEPR" by APG and Goodman.
ProLogis said it was taking the action for the benefit of all unit holders, following APG and Goodman's proposal, which it said had several conditions, "including that ProLogis sell its ownership stake in PEPR and relinquish its management contract to Goodman, a competitor of ProLogis in Europe".
Walter Rakowich, CEO at ProLogis, said: "Under ProLogis' management, PEPR's occupancy has consistently outperformed the broader pan-European market by 300-500 basis points."
"Additionally, over the last two years ProLogis has managed the refinancing or repayment of over €1.3bn of debt on behalf of PEPR."
APG and Goodman said they would make a joint statement once further details of the ProLogis' offer were revealed.
ProLogis has not revealed how it would finance the transaction, while APG and Goodman claim their cash offer is backed by a number of large pension and sovereign wealth funds.
On Wednesday, APG said its €6 offer was "compelling" for all unit holders - including ProLogis itself - and that the takeover would help reduce PEPR's existing discount to net asset value (NAV), which was a reflection of the fund's poor governance structure.
APG has long been campaigning to improve the existing governance structure at PEPR, which does not allow unit holders to vote to replace the fund's manager, ever since the fund was listed on Euronext Amsterdam in 2006.
APG has also highlighted potential conflicts of interests regarding the planned merger between ProLogis and AMB Property Corporation, which will see the merged company manage five separate real estate funds, all targeting the core European logistics sector at the same time, including AMB's recently announced joint venture with Allianz Real Estate.
Patrick Kanters, managing director for global real estate at APG, said "These five different vehicles will all focus on the same European logistics market and chase similar business opportunities," Kanters said.
"The plans for the merger have further deteriorated the outlook for PEPR to run a decent portfolio management."