ProLogis to acquire Catellus in $4.9 billion transaction (USA)

ProLogis and Catellus Development Corporation announced yesterday that their boards have unanimously approved a definitive merger agreement under which ProLogis will acquire all of the outstanding common stock of Catellus for a total consideration of approximately $4.9 billion, including assumed liabilities and transaction costs.

The combined company will offer the world's largest network of distribution facilities and services, with over 350 million ft² in over 2,250 facilities owned, managed and under development in 75 markets in North America, Europe and Asia, as well as unparalleled land positions, supporting more than 100 million buildable square feet of potential development across its global markets.

Under the terms of the agreement, Catellus stockholders will be able to elect to receive either $33.81 per share in cash or 0.822 of a ProLogis common share for every share of Catellus, representing a premium of 16.1% over the closing price of Catellus shares on Friday, June 3, 2005. Under the terms of the agreement, 65% of the Catellus shares will be exchanged for ProLogis common shares and 35% of the Catellus shares will be exchanged for cash. As a result, Catellus stockholder elections will be prorated such that the merger consideration is fixed at 56.7 million ProLogis shares and $1.255 billion in cash, or $11.83 per Catellus share. The stock component of the consideration is expected to be tax-free to Catellus stockholders.

The transaction is expected to be accretive to ProLogis' estimated 2006 Funds From Operations by approximately 3% to 5%. Among the key accretion drivers are ProLogis' integration of Catellus' development operations into ProLogis' fund management business, as well as significant cost savings in general and administrative expenses.

Jeffrey H. Schwartz, ProLogis chief executive officer, said, "This transaction dramatically changes the landscape of the U.S. industrial real estate market by consolidating two of the largest industrial property developers in North America. The addition of Ted Antenucci, president of Catellus Commercial Development, and his team of experienced development professionals will enhance ProLogis' North American development capabilities and, in turn, our growth potential and shareholder value.

"The transaction also supports strong development growth with Catellus' quality land bank, including almost 30 million buildable square feet in the top six distribution markets. In the U.S., Catellus' operating portfolio is a strong complement to our properties, being quite new with an average age of only 7.2 years and situated in outstanding locations in the premier distribution markets. As we integrate this acquisition, we will also continue to execute and build upon the international aspects of our strategy that position ProLogis to capitalize on the rapid growth in distribution opportunities worldwide," Mr. Schwartz concluded.

Walter C. Rakowich, ProLogis president and chief operating officer, said, "Catellus' significant presence in high-growth markets, strong occupancy levels, additional land and development capabilities, coupled with more rapid growth in our fund business, will accelerate ProLogis' future earnings growth. By increasing the size and quality of our direct-owned pool of industrial properties, we create substantially more flexibility, enabling us to support further growth in our global development and fund business."

Strong customer synergies also are expected to drive ProLogis' continued expansion. Catellus customers tend to be large companies seeking newer, functional distribution centers, consistent with ProLogis' targeted Focus 500 customers.

Nelson C. Rising, Catellus' chairman and chief executive officer, said, "This transaction achieves all of our financial and business objectives and provides our shareholders with the potential for strong future appreciation. We believe this is an excellent way for our shareholders to realize the value of the platform we have built and to participate in the future growth of ProLogis as it expands i

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