Prologis to Acquire Duke Realty in $26 Billion Deal

While the e-commerce industry has cooled and faces strong headwinds, one player is keeping the faith. Or, should we say, keeping the space.

On Monday, real estate giant Prologis agreed to acquire Duke Realty in an all-stock deal valued at $26 billion, creating the world's largest warehouse operation in the process. For Prologis, which uses its warehouse space to help store, process, and ship online orders for retailers, it's a giant bet that the world is simply taking a brief coffee break from its ceaseless online shopping spree.

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The high times of peak-pandemic life have ended for e-commerce operators. Look no further than Amazon, which posted its first quarterly loss in seven years this April and even admitted it overbuilt its physical operations to compensate for soaring demand during lockdowns. Its gloomy outlook -- headlined by a goal to shed at least 10 million square feet of warehouse space -- sent shockwaves through the larger shipping logistics industry, with shares of Prologis and Duke plummeting 30% and 24% respectively in 2022.

But for Prologis -- which counts Amazon, FedEx, and Home Depot as major clients -- opportunity is born from disaster, and a cashless deal to beef up its business amid a broad market downturn may be just what the doctor ordered. In acquiring Duke, consider that order fulfilled:

• Prologis already owned one billion square feet of industrial facilities across the globe, and its acquisition of Duke -- which on Friday had a $19.1 billion market cap -- will add another 160 million square feet.
• The acquisition will include high-value property in 19 key markets, including Chicago, Dallas, Atlanta, South Florida, New Jersey, and Southern California.

The deal is expected to close in the fourth quarter, according to CNBC, with Duke shareholders receiving 0.475x of a Prologis share for every one of their Duke shares. Prologis shares closed down 7.5% while Duke shares were up 1% at market close on Monday.