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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 11, 2022

 

 

PROLOGIS, INC.

 

PROLOGIS, L.P.

 

(Exact name of registrant as specified in its charter)

 

 

Maryland (Prologis, Inc.)   001-13545 (Prologis, Inc.)   94-3281941 (Prologis, Inc.)
Delaware (Prologis, L.P.)   001-14245 (Prologis, L.P.)   94-3285362 (Prologis, L.P.)
(State or other jurisdiction   (Commission   (I.R.S. Employer
of Incorporation)   File Number)   Identification No.)

 

Pier 1, Bay 1, San Francisco, California   94111
(Address of Principal Executive Offices)   (Zip Code)

 

Registrants’ Telephone Number, including Area Code: (415394-9000

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

x Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

    Title of each class   Trading Symbol(s)   Name of each exchange on which
registered
Prologis, Inc.   Common Stock, $0.01 par value   PLD   New York Stock Exchange
Prologis, L.P.   3.000% Notes due 2022   PLD/22   New York Stock Exchange
Prologis, L.P.   2.250% Notes due 2029   PLD/29   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

 

 

Co-Registrant CIK 0001045610
Co-Registrant Amendment Flag false
Co-Registrant Form Type 8-K
Co-Registrant DocumentPeriodEndDate 2022-06-11
Co-Registrant Written Communications true
Co-Registrant Solicitating Materials false
Co-Registrant PreCommencement Tender Offer false
Co-Registrant PreCommencement Issuer Tender Offer false
Co-Registrant Entity Emerging Growth Company false
Co-Registrant AddressLine1 Pier 1
Co-Registrant AddressLine2 Bay 1
Co-Registrant City San Francisco
Co-Registrant State California
Co-Registrant ZipCode 94111
Co-Registrant CityAreaCode 415
Co-Registrant LocalPhoneNumber 394-9000

 

 

 

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.

 

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 www.ir.prologis.com or at the SEC’s website at 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 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.

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  PROLOGIS, INC.
   
Dated: June 13, 2022 By: /s/ Edward S. Nekritz
    Name: Edward S. Nekritz 
    Title: Chief Legal Officer, General Counsel and Secretary

 

  PROLOGIS, L.P.
  By: Prologis, Inc., its General Partner 
   
Dated: June 13, 2022 By: /s/ Edward S. Nekritz
    Name: Edward S. Nekritz
    Title: Chief Legal Officer, General Counsel and Secretary

 

 

 

 

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