Battle For ProLogis European Nears End As ProLogis Upgrades Bid

The battle for ProLogis European Properties (PEPR.AE) looked to be moving towards a conclusion Monday as U.S. industrial real-estate giant ProLogis (PLD) raised its takeover bid for the Euronext-listed warehouses developer, and bought out the stake of a key rival.

The Denver-based company said late Friday it had increased its takeover offer for the biggest owner of warehouses in Europe to EUR6.20 per share, from a previous bid of EUR6.10 per share. The new offer values ProLogis European at just under EUR1.22 billion.

ProLogis said it had increased its stake in the company to around 60%, from around 39%, after Dutch pension-fund asset manager APG Algemene Pensioen Groep NV and an affiliate of the Government of Singapore Investment Corp. agreed to sell their shares.

APG and Australian property investor Goodman Group (GMG.AU) had a joint takeover bid for ProLogis European rejected April 12 after signaling they were prepared to offer ProLogis EUR6 per share for its stake, which valued ProLogis European at about EUR1.1 billion.

APG has been at loggerheads for years with ProLogis on how the majority shareholder controls the fund, also known as PEPR. ProLogis can't be replaced as manager before 2016 and the company has consistently said it plans to retain both its ownership in and management deal with ProLogis European.

ProLogis Chief Executive Walter Rakowich said: "ProLogis remains committed to its European platform and strongly believes the successful completion of its tender offer is in the best interests of both PEPR and ProLogis investors and provides all PEPR unitholders with substantial, certain and immediate value."

PEPR rejected ProLogis' EUR6.10 per share offer announced April 22 as inadequate, while key shareholders criticized the terms and timeframe of the bid.

Investors and analysts have long complained about a weak corporate-governance structure at ProLogis European that puts small unitholders at a significant disadvantage. Investors with less than a 20% holding have no powers to call general meetings or make proposals to the board.

ProLogis European had a portfolio with a market value of EUR2.8 billion at the turn of the year. It consisted of 232 buildings across 11 countries, covered 4.9 million square meters, and had an occupancy level of 94.5%.

At 0905 GMT, its shares traded up 1.2% at EUR6.20, the precise level of ProLogis' new bid.

-By Michael Haddon, Dow Jones Newswires; 4420-7842-9289; [e-mail]