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UPDATE 2-Prologis' higher PEPR offer wins over rival
May 7, 2011 / 1:05 AM / in 7 years

UPDATE 2-Prologis' higher PEPR offer wins over rival

* Ups bid to 6.20 euros; PEPR worth 1.24 bln euros

* ProLogis raises stake to 60 pct, gets control

* APG drops rival bid, sells PEPR shares to ProLogis

* Singapore’s GIC also sells PEPR shares to ProLogis

* ProLogis tender offer period extended to May 18 (Rewrites throughout; adds analyst comment, stock price, background, byline; previous dateline AMSTERDAM)

By Ilaina Jonas and Greg Roumeliotis

NEW YORK/AMSTERDAM, May 6 (Reuters) - ProLogis (PLD.N) struck deals on Friday to buy a majority stake in a European business it spun off in 2006, after the U.S. warehouse owner sweetened its offer to persuade two holdout shareholders to sell.

The deals will give ProLogis a 60 percent stake in ProLogis European Properties (PEPR) PEPR.AS, cementing its control over a portfolio of some of the most valuable European warehouses and removing a potential headache ahead of its own deal to merge with rival AMB Property Corp AMB.N.

ProLogis, a warehouse and distribution center owner, already has a tender offer for the remaining shares of PEPR, valuing the business at 1.24 billion euros ($1.78 billion).

ProLogis raised its offer for the shares of PEPR it doesn’t already own to 6.20 euros from 6.10 euros.

That was enough to convince Dutch pension manager APG to drop a joint bid with Australian property manager Goodman Group (GMG.AX) for PEPR and sell its stake to ProLogis instead.

ProLogis also struck a deal to buy PEPR shares held by the Government of Singapore Investment Corp, a sovereign wealth fund, at the new price.

The battle for PEPR has been going on since last month. Earlier this week, PEPR management dismissed ProLogis’ 6.10 euro bid as too low. A PEPR spokesman could not be reached for comment on the latest offer. [ID:nLDE7420AW]

With a majority stake, ProLogis will get control over PEPR, removing a problem that AMB Chairman Hamid Moghadam would have inherited when he becomes CEO of the merged ProLogis and AMB. Shareholders will vote on the ProLogis-AMB merger on June 1.

ProLogis already has two seats on PEPR’s six-member staggered board, and appointed the other four directors. ProLogis also manages PEPR and receives fees for doing so.

“This has been festering now for about a month or so, and taking care of it gets rid of an item that likely would have been high on Mr. Moghadam’s agenda following a merger,” Green Street Advisors analyst Steven Frankel said.

Luxembourg-based PEPR owns some of the highest quality warehouse and distribution centers in France, Britain, Italy, Spain and Central Europe, according to research firm Green Street Advisors.

TENDER OFFER

ProLogis said it would extend the higher offer to other shareholders and extended the deadline for holders to tender their shares to May 18 from May 11.

Those who already have tendered their units will get the new higher price at the end of the acceptance period, ProLogis said.

Last month APG and Goodman had offered to buy PEPR for 6 euros per share, prompting the rival bid from ProLogis at 6.10 euros per share.

ProLogis also raised its stake in PEPR at the time to 38 percent from 33 percent, which triggered a mandatory tender offer for the remaining shares.

“I never thought the odds of a competitive bid were very high to ever go through, given the impediments and given the governance structure,” Frankel said. “By getting APG on board, it reduces the perception that there will be a competitive bid.”

Hedge fund Fir Tree, which has a 4.3 percent stake and has said that the original ProLogis offer was too low, declined to comment on the new price and if it would tender its shares.

Shares of ProLogis closed down 1.3 percent at $15.85 and AMB fell 1.1 percent to $35.53, both on the New York Stock Exchange. PEPR shares closed down 0.2 percent at $6.128 euros on the Euronext Amsterdam Exchange. (1 euro= $1.43) (Reporting by Ilaina Jonas in New York and Greg Roumeliotis in Amsterdam; Editing by Matthew Lewis and Richard Chang)

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