As the demand for the online shopping is bloating, Prologis Inc. has agreed to take over the DCT Industrial Trust Inc. that will make the warehouse giant even bigger. The deal will include $8.4 billion as well as assumed debt.
The stockholders of DCT will be receiving 1.02 Prologis share in exchange for every share they hold. This will represent a hike of 16% over the closing amount of DCT that was $58.75. The purchase was approved by both the companies that are anticipated to accomplish in the third quarter.
The immense real estate property of DCT, which is 71 million square feet or 6.6 million square meters will assist Prologis to intensify the presence even in the top-notch markets of San Francisco Bay area, Southern California, New Jersey, New York, Seattle, and South Florida. These places offer the finest logistic services and warehouse space, which are driven by the e-commerce.
As per the CEO of the Prologis, the DCT markets are aligned with the market of Prologis with the same category of customers and sometimes same clients.
The investment of the real estate that focuses on the industrial property has beaten the REIT that primarily focuses on the rental apartments, office buildings, and malls. The demand for the online shopping is very high, especially in the larger cities, which has contributed to the same.
Prologis, as well as DCT, had contested to enhance the services related to e-commerce for the tenants, in warehouses. The procurement of DCT involves development and re-development of 7.1 million square feet. Even both the companies have spent a long time to outperform each other which has sharpened the capabilities of the individual firms.
The deal is anticipated to save $80 million in the areas of interest expense, cost savings, as well as lease adjustments. It is also predicted that the organization will create annual revenue of $40 million.
Bank of America Corp. is acting as the financial advisor of DCT while JP Morgan Chase & Co. of Prologis.