Merger talks boost shares in ProLogis, AMB Property

(Reuters) - Shares in ProLogis (PLD.N) and AMB Property Corp AMB.N rose ahead of the market open 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.

In a statement late Wednesday, the companies said they would combine in an all-stock, at-market transaction "based upon the unaffected trading prices of the companies' stock prior to media reports of a possible merger.

"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.

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.

ProLogis shares, which have gained about 16 percent in the last 12 months, rose 10 percent in pre-market trade to $16.25 from a Wednesday close of $14.70.

AMB shares were up 6.5 percent in pre-market at $35. They have gained about 40 percent in the last year.

(Reporting by A.Ananthalakshmi in Bangalore, Editing by Ian Geoghegan)