Analyst Note
| Kevin Brown, CFA |No-moat Prologis announced that it has offered to acquire no-moat Duke Realty in a $23.7 billion all-stock transaction. Prologis is offering 0.466 shares of its common stock per share of Duke’s common stock, which values Duke Realty at $61.68 per share, a 29% premium compared with Duke’s closing price on May 9. However, Prologis also revealed in the press release that it has tried engaging with Duke’s management over the past five months, having offered an exchange ratio of 0.465 that represented a 20% premium over Duke’s closing price on Nov. 29, 2021. While we view the current offer to be a positive for Duke Realty shareholders given it is a 16% premium to our $53 fair value estimate, we don’t believe that the deal is likely to be accepted either by Duke’s management team or by Duke’s shareholders. Therefore, we do not plan to change either our $143 fair value estimate for Prologis or our $53 fair value estimate for Duke Realty.