UPDATE 1-ProLogis-AMB merger talks boost industrial REIT shares

* Cos negotiating all-stock, at-market deal

* AMB seen as the buyer of bigger rival ProLogis

* Deal news boosts shares of other industrial REITs (Adds broker comments, share movement of peers)

BANGALORE, Jan 27 (Reuters) - Shares in ProLogis (PLD.N) and AMB Property Corp AMB.N and peers rose on Thursday after the two largest publicly traded U.S. owners of warehouses and distribution centers said they were in merger talks.

A combination would result in one of the largest real estate deals since the financial crisis. ProLogis and AMB have a combined market value of close to $14 billion, based on their Wednesday closing prices. [ID:nN26194529]

In a statement late Wednesday, the companies said they were in talks for an all-stock, at-market transaction "based upon the unaffected trading prices of the companies' stock prior to media reports of a possible merger." [ID:nSGE70Q024]

"While this may be a merger, it's likely investors may well regard AMB as the acquirer and ProLogis as the target, given the higher leverage of ProLogis' balance sheet and, in contrast, the availability of debt to execute for AMB," FBR Capital Markets analyst Sri Nagarajan said in a note.

ProLogis, with a market cap of about $8.36 billion, is the bigger company of the two and is expected to generate revenue of $924.9 million in fiscal 2010. AMB is expected to post $607.0 million in revenue in 2010, according to Thomson Reuters I/B/E/S.

Nagarajan said cost savings from the deal would be initially $70-$75 million annually for the combined entity, later increasing to well above $100 million a year.

Citigroup analyst Michael Bilerman said the combined company would have an enterprise value of over $28 billion, making it the fourth largest REIT.

Bilerman does not expect the ProLogis-AMB deal to lead to a significant wave of mergers and acquisitions in the public industrial real estate investment trust (REIT) space but he did not completely rule out other deals.

"Having fewer large and liquid industrial companies to invest in could have a positive technical impact on REITs with industrial exposure," Bilerman said.

Industrial REITs such as Liberty Property Trust (LRY.N), Duke Realty (DRE.N) and First Industrial (FR.N) were trading up on Thursday.

ProLogis shares, which have gained about 16 percent in the last 12 months, rose as much as 12 percent on Thursday.

AMB shares jumped as much as 10 percent but pared most of the gains to trade up 4 percent at $34.07. They have gained about 40 percent in the last year. (Reporting by A.Ananthalakshmi in Bangalore, Editing by Ian Geoghegan)