ProLogis (NYSE: PLD) has announced that it intends to retain its ownership stake in and management agreement with ProLogis European Properties (Euronext: PEPR), a publicly-traded fund consisting of high-quality distribution and logistics facilities in Europe.
The company is issuing this statement in response to a joint press release from APG Algemene Pensioen Groep N.V. ('APG') and Goodman Group (referred to collectively as the 'Investor Group'), which related to and unsolicited letter of interest received by ProLogis on March 31, 2011, expressing interest in acquiring ProLogis' 33.1% ownership interest in PEPR on behalf of an undisclosed consortium.
The Investor Group's letter of interest included numerous conditions, including satisfactory completion of due diligence, and placed a value on ProLogis' stake at 378 million, or 6 per unit, based on the approximate mid-point of measures of PEPR's year-end 2010 net asset value. The letter of interest also indicated that the offer was conditioned upon ProLogis relinquishing its management agreement to Goodman Group.
Despite the highly contingent nature of the offer and APG's request for secrecy, ProLogis immediately brought the letter to the attention of the PEPR board in an effort to insure good governance, transparency and the interest of all PEPR unit holders.
In its response to the Investor Group's letter of interest, Walter C. Rakowich, ProLogis CEO, said, "ProLogis has no intent or desire to sell its interest in PEPR. Additionally we have no intention of selling or relinquishing the management of PEPR. The value proposition of PEPR has always been inextricably linked to ProLogis' active ownership and management. ProLogis provides unparalleled industrial management expertise, as well as a strong European operation and a global finance organization.
"In addition, ProLogis' significant ownership stake in PEPR ensures that, as an external manager, our interests are fully aligned with those of PEPR's unitholders. These advantages benefit all unitholders and they represent some of the key reasons why unitholders invest in PEPR."
In its response, ProLogis also offered to continue its dialogue with APG regarding a range of value-enhancing alternatives in a professional and cooperative fashion with the objective of finding a mutually satisfactory way forward that will serve the interests of all PEPR unitholders.
"APG had acknowledged in related discussions that it intended to use the timing of our pending merger to exert undo influence, and we regret that APG and Goodman have elected to pursue this matter in the media," Rakowich added.
ProLogis said the expression of interest from the Investor Group and the subsequent response by ProLogis are not expected to have any impact on the proposed merger of equals between ProLogis and AMB Property Corporation (NYSE: AMB).