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.
The Merger Agreement provides that, in connection with the termination
of the Merger Agreement under specified circumstances, DRE may be required to pay to Prologis a termination fee of $775 million, Prologis
may be required to pay to DRE a termination fee of $1.5 billion, or either party may be required to reimburse the other party’s
transaction expenses up to an amount equal to $15 million.
The foregoing summary of the Merger Agreement does not purport to be
a complete description and is qualified in its entirety by the full text of the Merger Agreement, which is attached hereto as Exhibit
2.1 and is incorporated herein by reference.
The Merger Agreement has been included to provide investors with information
regarding its terms. It is not intended to provide any other factual information about Prologis, Prologis OP, DRE, DRE OP or their respective
subsidiaries or affiliates. The representations and warranties contained in the Merger Agreement were made only for purposes of the Merger
Agreement and as of specific dates, are solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed
upon by the contracting parties (including being qualified by confidential disclosures made by the parties), may have been made for purposes
of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be
subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are
not third-party beneficiaries to the representations and warranties contained in the Merger Agreement and should not rely on the representations
and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any
of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties
may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Prologis’s
or Prologis OP’s or DRE’s or DRE OP’s public disclosures.