Duke Realty rejects nearly $24 billion takeover bid from Prologis

Duke Real Estate Corp.

DRE 7.83%

on Wednesday rejected a nearly $24 billion takeover bid from warehousing giant Prologis Inc.,

PLD -1.19%

calling the unsolicited offer insufficient.

“We believe that the latest offer, substantially unchanged from its previous proposals, falls short in this regard,” Duke Realty said in a statement, adding that it would have no further comment on the proposal at this time.

Prologis released its all-stock bid for Duke Realty on Tuesday after more than five months of private offerings. The deal would have added to Prologis’ vast footprint of warehouses and distribution centers that facilitate e-commerce orders.

Prologis controls over 1 billion square feet of industrial real estate used by companies such as Inc.,

Home deposit Inc.

and Fedex Corp.

to store goods and fulfill online orders.

The offer from Duke Realty, which owns about 160 million square feet of industrial real estate in 19 major U.S. logistics markets, was seen as a vote of confidence in the e-commerce sector at a time when some investors are concerned about his growth.

Prologis offered to buy Duke Realty for $61.68 per share, or about $23.7 billion. Under this offer, Duke Realty shareholders would receive 0.466 of a common share of Prologis for each common share of Duke Realty they hold.

Shares of Duke Realty rose 7.8% to $53.44 on Wednesday, well below the bid, suggesting investors are skeptical the deal will go through.

Prologis shares rose 1.6% to $127.44.

Industrial real estate has been one of the best performing commercial real estate sectors in recent years due to the explosive growth of e-commerce, which requires cavernous warehouses for storage and fulfillment operations. Online shopping has been boosted during the pandemic as more consumers have shopped online.

Recent comments from some companies have shaken the growth story.

Shares of industrial real estate companies such as Prologis and Duke Realty fell after Amazon announced a quarterly loss last month. Amazon chief executive Andy Jassy spooked the industrial market when he said the company was “no longer looking for physical capacity or people.”

Analysts have also questioned whether the growth in demand for industrial space is sustainable given the glut of this market in the past.

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