Blog: PROLOGIS, INC. : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K) – Marketscreener.com

Item 1.01. Entry into a Material Definitive Agreement.

On June 11, 2022, Prologis, Inc. (“Prologis”) and Prologis, L.P. (“Prologis OP”)
entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and
among Prologis, Prologis OP, Compton Merger Sub LLC, a Delaware limited
liability company and a wholly owned subsidiary of Prologis (“Prologis Merger
Sub”), Compton Merger Sub OP LLC, a Delaware limited liability company and a
wholly owned subsidiary of Prologis OP (“Prologis OP Merger Sub” and, together
with Prologis, Prologis OP and Prologis Merger Sub, the “Prologis Parties”),
Duke Realty Corporation, an Indiana corporation (“DRE”) and Duke Realty Limited
Partnership, an Indiana limited partnership (“DRE OP” and, together with DRE,
the “DRE Parties”).

The Merger Agreement provides that, upon the terms and subject to the conditions
set forth in the Merger Agreement, (a) DRE will merge with and into Prologis
Merger Sub (the “DRE Merger”), with Prologis Merger Sub surviving the merger and
remaining a wholly owned subsidiary of Prologis (the “Surviving Entity”), (b)
thereafter, Prologis and the Surviving Entity will cause all of the outstanding
equity interests of the Surviving Entity to be contributed to Prologis OP in
exchange for the issuance by Prologis OP of partnership interests in Prologis OP
to Prologis and/or its subsidiaries as directed by Prologis, and (c) thereafter,
Prologis OP Merger Sub will be merged with and into DRE OP, with DRE OP
surviving the merger and becoming a wholly owned subsidiary of Prologis OP (the
“Partnership Merger” and, together with the DRE Merger, the “Mergers”).

At the effective time of the DRE Merger (the “DRE Merger Effective Time”), each
share of common stock, par value $0.01 per share, of DRE (“DRE Common Stock”)
issued and outstanding immediately prior to the DRE Merger Effective Time (other
than shares of DRE Common Stock owned by any of the DRE Parties or any of their
respective wholly owned DRE subsidiaries and shares of DRE Common Stock owned by
any of the Prologis Parties or any of their respective wholly owned
subsidiaries) will be automatically converted into the right to receive 0.475
(the “Exchange Ratio”) validly issued, fully paid and non-assessable shares of
common stock, par value $0.01 per share, of Prologis (“Prologis Common Stock”
and such consideration, the “Merger Consideration”), together with cash in lieu
of fractional shares, without interest, but subject to any withholding required
under applicable law, upon the terms and subject to the conditions set forth in
the Merger Agreement.

Prologis will take all action necessary to add James B. Connor, DRE’s Chairman
and Chief Executive Officer, to the Prologis board of directors at the DRE
Merger Effective Time.

The DRE Merger is intended to qualify as a “reorganization” within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended.

At the effective time of the Partnership Merger (the “Partnership Merger
Effective Time”), (a) the general partner interests in DRE OP as of immediately
prior to the Partnership Merger Effective Time will remain general partnership
interests in DRE OP, (b) each common partnership interest of DRE OP (“DRE Common
OP Units”) that is issued and outstanding immediately prior to the Partnership
Merger Effective Time (other than any DRE Common OP Units as described in
clauses (c) and (d) below) will automatically be converted into new validly
issued common limited partnership interests in Prologis OP in an amount equal to
the Exchange Ratio and each holder of DRE Common OP Units will be admitted as a
limited partner of Prologis OP in accordance with the terms of Prologis OP’s
partnership agreement, (c) each DRE Common OP Unit owned by the Surviving Entity
as of immediately prior to the Partnership Merger Effective Time will remain
outstanding at and following the Partnership Merger Effective Time and (d) each
DRE Common OP Unit owned by any wholly owned subsidiary of the Surviving Entity
or of DRE OP, in each case, as of immediately prior to the Partnership Merger
Effective Time, will be canceled and will cease to exist, and no consideration
will be delivered in exchange therefor.

The consummation of the Mergers is subject to certain closing conditions,
including (a) the approval of the Merger Agreement by the holders of a majority
of the outstanding shares of DRE Common Stock and the approval of the issuance
of Prologis Common Stock in the DRE Merger (the “Prologis Common Stock
Issuance”) by a majority of votes of Prologis Common Stock cast on such matter,
(b) the shares of Prologis Common Stock to be issued in the DRE Merger will have
been approved for listing on the New York Stock Exchange, (c) the Form S-4 to be
filed by Prologis to register the offer and sale of shares of Prologis Common
Stock in the DRE Merger being declared effective, (d) the absence of any
temporary restraining order, injunction or other legal order, and no law being
enacted, which would have the effect of making illegal or otherwise prohibiting
the consummation of the Mergers, (e) the receipt of certain legal opinions by
Prologis and DRE and (f) other customary conditions specified in the Merger
Agreement.

The Merger Agreement contains customary representations, warranties, agreements
and covenants, including covenants providing that each of the Prologis Parties
and the DRE Parties will use commercially reasonable efforts to conduct their
respective businesses in all material respects in the ordinary course,
consistent with past practice, during the period between the execution of the
Merger Agreement and the earlier of the DRE Merger Effective Time or the
termination of the Merger Agreement. Specifically, none of the DRE Parties can
take certain specified actions without Prologis’s prior written consent (not to
be unreasonably withheld, delayed or conditioned), including, among other things
(subject to certain exceptions) (a) issuing any shares, (b) making any loans or
incurring any indebtedness, (c) settling certain litigation, (d) making capital
expenditures not in accordance with DRE’s capital expenditure plan or (e) taking
any action, or failing to take any action, that would reasonably be expected to
cause (i) DRE to fail to qualify as a REIT or (ii) any DRE subsidiary to cease
to be treated as a partnership or disregarded entity for federal income tax
purposes or a qualified REIT subsidiary, a taxable REIT subsidiary or a REIT.

Each of Prologis and DRE has agreed not to make, declare or set aside any
dividend or other distribution to its respective shareholders without the prior
written consent of the other party, except that upon written notice to the other
party, (a) DRE may authorize and pay (i) quarterly distributions at a rate not
in excess of $0.28 per share per quarter and (ii) the regular distributions that
are required to be made in respect of the DRE Common OP Units in connection with
any dividends paid on the shares of DRE Common Stock under DRE OP’s partnership
agreement and (b) Prologis may authorize and pay (i) quarterly distributions at
a rate not in excess of $0.79 per share per quarter, except that Prologis’s
board of directors may increase such dividend by no more than 15% (and if
Prologis does make such an increase, DRE will be permitted to make a
corresponding increase (of not more than 15%) in its regular dividend for the
same quarterly period), (ii) dividends pursuant to the terms of the Series Q
Preferred Stock, par value $0.01, of Prologis and (iii) the regular
distributions that are required to be made in respect of the common limited
partnership interests in Prologis OP in connection with any dividends paid on
the Prologis Common Stock and dividends required to be made in respect of the
limited partnership interests in Prologis OP designated as “Series Q Preferred
Partnership Units,” “6.25% Series T Cumulative Redeemable Preferred Partnership
Units” and “Class A Convertible Common Units” under Prologis OP’s partnership
agreement. In addition, DRE has agreed that any quarterly dividends or
distributions by DRE Parties will have the same record date and the same payment
date as Prologis and the Prologis OP.

Each of Prologis and DRE has agreed not to (a) solicit proposals relating to
certain alternative transactions, (b) enter into discussions or negotiations or
provide non-public information in connection with any proposal for an
alternative transaction from a third party or (c) approve or enter into any
agreements providing for any such alternative transaction, subject to certain
exceptions to permit members of each of Prologis’ and DRE’s board of directors
to comply with their duties as directors under applicable law. Notwithstanding
these “no-shop” restrictions, prior to obtaining the Prologis and DRE
shareholder approval, under specified circumstances Prologis’ or DRE’s
respective board of directors may change its respective recommendation of the
transaction, and DRE may also terminate the Merger Agreement to accept a
superior proposal upon payment of the termination fee described below.

The Merger Agreement may be terminated under certain other circumstances,
including by either Prologis or DRE if the Mergers have not been consummated on
or before January 11, 2023, if a final and non-appealable order is entered
enjoining or otherwise prohibiting the Mergers, if the DRE shareholders shall
have voted at the special meeting held to consider the approval of the Merger
Agreement and the Merger Agreement is not approved, or if the Prologis
shareholders shall have voted at the special meeting held to consider the
approval of the Prologis Common Stock Issuance and the Prologis Common Stock
Issuance is not approved.
. . .

Item 7.01. Regulation FD Disclosure.

On June 13, 2022, Prologis and DRE issued a joint press release announcing the
execution of the Merger Agreement. The full text of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Also on June 13, 2022, Prologis posted an investor presentation to its investor
relations website at ir.prologis.com related to the transactions contemplated by
the Merger Agreement. The presentation provides information on both Prologis and
DRE and an overview of the strategic rationale for the transaction. The
presentation is attached hereto as Exhibit 99.2.

The information contained in Item 7.01 of this report, including Exhibit 99.1
and Exhibit 99.2, shall not be incorporated by reference into any filing of the
registrant, whether made before, on or after the date hereof, regardless of any
general incorporation language in such filing, unless expressly incorporated by
specific reference to such filing. The information contained in Item 7.01 of
this report, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of that section.

Item 9.01. Financial Statements and Exhibits.



(d) Exhibits.



Exhibit Number   Description
  2.1              Agreement and Plan of Merger, dated as of June 11, 2022, by and
                 among the Prologis Parties and the DRE Parties.*
  99.1             Press Release of Prologis and DRE, dated June 13, 2022.
  99.2             Investor Presentation, dated June 13, 2022.
104              Cover Page Interactive Data File (embedded within the Inline XBRL
                 document)



* Schedules have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. Prologis agrees to furnish supplementally to the SEC a copy of
any omitted schedule upon request by the SEC.




FORWARD-LOOKING STATEMENTS


The statements in this communication that are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are based on current expectations,
estimates and projections about the industry and markets in which Prologis and
DRE operate as well as beliefs and assumptions of Prologis and DRE. Such
statements involve uncertainties that could significantly impact Prologis’ or
DRE’s financial results. Words such as “expects,” “anticipates,” “intends,”
“plans,” “believes,” “seeks,” and “estimates,” including variations of such
words and similar expressions, are intended to identify such forward-looking
statements, which generally are not historical in nature. All statements that
address operating performance, events or developments that Prologis or DRE
expects or anticipates will occur in the future – including statements relating
to any possible transaction between Prologis and DRE, rent and occupancy growth,
acquisition and development activity, contribution and disposition activity,
general conditions in the geographic areas where Prologis or DRE operate,
Prologis’ and DRE’s respective debt, capital structure and financial position,
Prologis’ and DRE’s respective ability to earn revenues from co-investment
ventures, form new co-investment ventures and the availability of capital in
existing or new co-investment ventures – are forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict. Although Prologis
and DRE believe the expectations reflected in any forward-looking statements are
based on reasonable assumptions, neither Prologis nor DRE can give assurance
that its expectations will be attained and, therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking statements. Some of the factors that may affect outcomes and
results include, but are not limited to: (i) Prologis’ and DRE’s ability to
complete the proposed transaction on the proposed terms or on the anticipated
timeline, or at all, including risks and uncertainties related to securing the
necessary shareholder approvals and satisfaction of other closing conditions to
consummate the proposed transaction; (ii) the occurrence of any event, change or
other circumstance that could give rise to the termination of the merger
agreement relating to the proposed transaction; (iii) risks related to diverting
the attention of Prologis and DRE management from ongoing business operations;
(iv) failure to realize the expected benefits of the proposed transaction; (v)
significant transaction costs and/or unknown or inestimable liabilities; (vi)
the risk of shareholder litigation in connection with the proposed transaction,
including resulting expense or delay; (vii) the risk that DRE’s business will
not be integrated successfully or that such integration may be more difficult,
time-consuming or costly than expected; (viii) risks related to future
opportunities and plans for the combined company, including the uncertainty of
expected future financial performance and results of the combined company
following completion of the proposed transaction; (ix) the effect of the
announcement of the proposed transaction on the ability of Prologis and DRE to
operate their respective businesses and retain and hire key personnel and to
maintain favorable business relationships; (x) risks related to the market value
of the Prologis common stock to be issued in the proposed transaction; (xi)
other risks related to the completion of the proposed transaction and actions
related thereto; (xii) national, international, regional and local economic and
political climates and conditions; (xiii) changes in global financial markets,
interest rates and foreign currency exchange rates; (xiv) increased or
unanticipated competition for Prologis’ or DRE’s properties; (xv) risks
associated with acquisitions, dispositions and development of properties,
including increased development costs due to additional regulatory requirements
related to climate change; (xvi) maintenance of Real Estate Investment Trust
status, tax structuring and changes in income tax laws and rates; (xvii)
availability of financing and capital, the levels of debt that Prologis and DRE
maintain and their credit ratings; (xviii) risks related to Prologis’ and DRE’s
investments in co-investment ventures, including Prologis’ and DRE’s ability to
establish new co-investment ventures; (xix) risks of doing business
internationally, including currency risks; (xx) environmental uncertainties,
including risks of natural disasters; (xxi) risks related to the coronavirus
pandemic; and (xxii) those additional factors discussed under Part I, Item 1A.
Risk Factors in Prologis’ and DRE’s respective Annual Reports on Form 10-K for
the year ended December 31, 2021. Neither Prologis nor DRE undertakes any duty
to update any forward-looking statements appearing in this communication except
as may be required by law.









Additional Information


In connection with the proposed transaction, Prologis will file with the
Securities and Exchange Commission (“SEC”) a registration statement on Form S-4
(“Form S-4”), which will include a document that serves as a prospectus of
Prologis and a joint proxy statement of Prologis and DRE (the “joint proxy
statement/prospectus”), and each party will file other documents regarding the
proposed transaction with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO
READ THE FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. A definitive joint proxy statement/prospectus
will be sent to Prologis’ and DRE’s shareholders. Investors and security holders
will be able to obtain the Form S-4 and the joint proxy statement/prospectus
free of charge from the SEC’s website or from Prologis or DRE. The documents
filed by Prologis with the SEC may be obtained free of charge at Prologis’
website at the SEC Filings section of http://www.ir.prologis.com or at the SEC’s
website at http://www.sec.gov. These documents may also be obtained free of charge from
Prologis by requesting them from Investor Relations by mail at Pier 1, Bay 1,
San Francisco, CA 94111. The documents filed by DRE with the SEC may be obtained
free of charge at DRE’s website at the SEC Filings section of
http://investor.dukerealty.com or at the SEC’s website at http://www.sec.gov. These
documents may also be obtained free of charge from DRE by requesting them from
Investor Relations by mail at 8711 River Crossing Blvd. Indianapolis, IN 46240.

This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.

Participants in the Solicitation

Prologis and DRE and their respective directors, executive officers and other
members of management may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information about Prologis’
directors and executive officers is available in Prologis’ Annual Report on Form
10-K for the fiscal year ended December 31, 2021, its proxy statement dated
March 25, 2022, for its 2022 Annual Meeting of Shareholders and its Current
Report on Form 8-K/A filed with the SEC on April 5, 2022. Information about
DRE’s directors and executive officers is available in DRE’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2021, its proxy statement dated
March 2, 2022, for its 2022 Annual Meeting of Shareholders and its Current
Report on Form 8-K filed with the SEC on April 27, 2022. Other information
regarding the participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise, will be
contained in the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC regarding the proposed transaction when they become
available. Investors should read the joint proxy statement/prospectus carefully
when it becomes available before making any voting or investment decisions. You
may obtain free copies of these documents from Prologis or DRE as indicated
above.

© Edgar Online, source Glimpses

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