UPDATE 3-PEPR shares spike on bidding war hopes

Thu Apr 14, 2011 12:56pm EDT

Related Topics

* ProLogis offers 6.10 euros/shr vs 6 euros APG/Goodman bid

* ProLogis increases PEPR stake to about 38 pct from 33 pct

* Higher APG/Goodman offer possible - analyst

* PEPR shares close up 8 pct at 6.21 euros/shr (Adds former PEPR shareholder, analyst comment, updates shares)

By Gilbert Kreijger

AMSTERDAM, April 14 (Reuters) - U.S. property group ProLogis (PLD.N) sparked hopes of a bidding war on Thursday for ProLogis European Properties (PEPR) PEPR.AS, topping a $1.7 billion bid from APG and Australian property manager Goodman (GMG.AX).

ProLogis, which manages the industrial and logistic property of PEPR, said in a statement it offered 6.10 euros per ordinary PEPR share and had increased its stake to about 38 percent from 33.1 percent previously.

Dutch pension group APG, which has been in disagreement with PEPR's management for more than two years over PEPR's strategy and corporate governance structure, hoped to end the quarrel by its joint offer with Goodman, APG and Goodman said on Tuesday.

PEPR ordinary shares hit a 30-month high and closed up 8 percent at 6.21 euros, above the highest offer and sparking speculation of a higher bid.

"Goodman is looking for an entry to the European property sector. I think there will be a rise of the offer but to what extent I don't know," said Joel Gorsele, analyst at Belgian broker Petercam.

U.S. investment management firm Third Avenue Management, which sold its 11 million PEPR shares to ProLogis on Wednesday, doubted whether there would be a higher offer.

"Frankly, I don't understand why it's trading above the 6.10 tender price. I think there is maybe anticipation of a bidding war but I think it's highly unlikely because ProLogis controls the management (of PEPR)," said Mike Winer, portfolio manager for Third Avenue Real Estate Value Fund.

Rabobank analyst Martijn ter Laak also doubted a higher offer would occur.

"As ProLogis explicitly mentions Goodman Group as being a competitor in Europe it is unlikely they would reinforce competition by selling PEPR and its management contract," Ter Laak said in a research note.

AMB MERGER

Petercam analyst Gorsele said that ProLogis would probably also be willing to increase its offer price further, given the value of combining the management contract and stake in PEPR and because ProLogis is merging with U.S. rival AMB Property Corp. AMB.N, which wants to expand its European exposure.

ProLogis Chief Executive Walter Rakowich told Reuters the AMB merger was not a factor in ProLogis's offer for PEPR and he declined to comment on a possible higher offer.

APG and Goodman said in a joint statement they have noted "with interest" ProLogis' offer and would wait for further details.

Goodman and APG said earlier this week they planned to go ahead with a joint $1.7 billion takeover bid for PEPR despite parent ProLogis' initial rejection.

The ProLogis offer is valued at 1.16 billion euros, based on 190.5 million ordinary PEPR shares outstanding, according to data on PEPR's website. PEPR also has 10.3 million convertible preferred units PEPR_p.AS outstanding, the website says.

ProLogis could not raise its stake further until the offer document was published, which will include an offer for convertible preferred PEPR units, Rakowich said. (Editing by Sara Webb and Jon Loades-Carter)

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