ProLogis embracing Brazil. Denver-based ProLogis will gain a foothold in Brazil as a result of its planned merger with AMB Property Corp., the company's chief executive said Wednesday.
"That's one of the areas of the world that we had an acute interest in," ProLogis CEO Walt Rakowich told The Denver Post on Wednesday, just two days after the deal was announced. "AMB already had an infrastructure of people there doing business. By merging, we can take our customer relationships with our companies that want space in Brazil and plug them into AMB. You have a very significant population base there. It has cheaper manufacturing and labor."
The merger also enables ProLogis to re-enter China. The company sold all of its assets in China at the end of 2008, when the financial crisis was at its peak.
"With the AMB merger, we're now in all the markets we would like to be in for the foreseeable future," Rakowich said.
Though ProLogis' corporate headquarters will move to San Francisco when the companies merge, its operations — or the management of its real estate portfolios — will remain in Denver. The company would not say how many people it employs in Colorado.
"The vast majority of employees will remain employed here in Denver," Rakowich said. "The Denver presence is very important to the new company."
Since taking over as CEO of ProLogis in 2008, Rakowich has sold $5.8 billion in assets, using the proceeds to pay down debt and recapitalize.
The company also worked at leasing projects that were underway under former CEO Jeff Schwartz and selling off land and older buildings in secondary markets.
The combined companies will be able to absorb ProLogis' surplus land more rapidly, Rakowich said.
"ProLogis was a little bit land heavy, and AMB was not land heavy," he said. "When we put the companies together, the combined land balance becomes much more right-sized."
The combined companies, which will operate under the ProLogis name, expect to save about $80 million a year after the 18-month integration period. Their portfolio will encompass about 600 million square feet of distribution facilities in 22 countries.
"The merger is a logical next step for (ProLogis), which has focused on repairing its balance sheet since suffering a near-death experience in the liquidity-starved aftermath of the Lehman collapse," Kathleen Shanley of GimmeCredit wrote in a research report released Wednesday.
Source : http://www.denverpost.com
