The two largest publicly traded U.S. owners of warehouses and distribution centers are negotiating a merger that could once again leave the metro area fighting to keep a corporate headquarters.
Denver-based ProLogis and AMB Property Corp. of San Francisco announced late Wednesday that they are considering combining in an all-stock, at-market transaction based on the trading prices of both companies’ stock before reports of a possible merger were published. The combined company would be worth $15 billion.
While the companies confirmed the merger talks, they said they would make no further comment unless and until a definitive agreement is reached or negotiations are terminated.
Shares of ProLogis rose $1.17, or 8 percent, to $15.87 in New York Stock Exchange composite trading. AMB rose $1.15, or 3.5 percent, to $34.01.
Because much of ProLogis’ business is in Asia, there likely will be considerable pressure for the merged company to locate its headquarters in San Francisco, said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
It would be another in a string of corporate headquarters that have defected. Colorado’s Fortune 500 base has dwindled from 12 firms in 2007 to eight after factoring in the pending departure of Qwest and arrival of kidney-care provider DaVita. Two companies fell off the list because of lower revenues. Coors merged with Milwaukee-based Miller Brewing and moved to Chicago. Qwest agreed to sell out to a Louisiana company.
Frontier Airlines, not a Fortune 500 firm but one of the state’s most visible companies, was acquired out of bankruptcy by Indianapolis-based Republic Airways, and First Data relocated to Atlanta.
If ProLogis does move, the region loses not only another headquarters but also a leader in clean technology.
“They’re very prominent globally in clean technology, energy conservation and alternative energy uses,” Clark said. “They’re very much a leader in where we are trying to go as a community.”
Analysts Sri Nagarajan and Evan Smith of FBR Capital Markets view the merger as a positive for the companies and expect them to realize initial cost savings of up to $75 million annually, ramping up to more than $100 million a year in 2013 and beyond, according to a research report released Thursday.
They also anticipate that AMB chief executive Hamid Moghadam will remain in that role, and ProLogis CEO Walt Rakowich will become president of the combined entity.
“ProLogis’ business plan, focused on recovering from the debt crisis, has been well executed and, in our opinion, highlights the strength of Mr. Rakowich’s leadership skills,” they wrote in the report. “We believe that this skill should remain valuable in achieving the operational synergies of the combined entity.”
Since taking the helm of ProLogis in 2008, Rakowich has sold $5.8 billion in assets, using the proceeds to pay down debt and recapitalize.
Last year, ProLogis sold 182 industrial buildings in North America and a minority interest in a hotel to Blackstone Real Estate Advisors for $1.01 billion.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
