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Prologis To Acquire Duke Realty In All-stock Deal Valued At About $26 Bln

Prologis, Inc. (PLD) and Duke Realty Corp. (DRE) announced Monday that the two companies have entered into a definitive merger agreement by which Prologis will acquire Duke Realty in an all-stock transaction, valued at approximately $26 billion, including the assumption of debt.

The respective board of directors for Prologis and Duke Realty have unanimously approved the transaction.

With the transaction, Prologis will gain high-quality properties for its portfolio in key geographies, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta. However, Prologis plans to hold approximately 94% of the Duke Realty assets and exit one market.

The transaction is anticipated to create immediate accretion of approximately $310 million to $370 million from corporate general and administrative cost savings and operating leverage.

In year one, the transaction is expected to increase annual core funds from operations (Core FFO), excluding promotes per share by $0.20 to $0.25. On a Core AFFO basis, excluding promotes, the deal is expected to be earnings neutral in year one.

Further, future synergies have the potential to generate approximately $375 million to $400 million in annual earnings and value creation, including $70 million to $90 million from incremental property cash flow and Essentials income, $5 million to $10 million in cost of capital savings and $300 million in incremental development value creation.

Under the terms of the agreement, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share they own. The transaction, which is currently expected to close in the fourth quarter of 2022, is subject to the approval of Prologis and Duke Realty shareholders and other customary closing conditions.

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