The UK’s two largest shed developers, ProLogis and Gazeley, have been in merger talks.
Discussions between Gazeley chief John Duggan and ProLogis’s European managing director Alan Curtis and their superiors were under way in the UK and America for a year.
But negotiations have stalled as the two parties failed to agree the value of Gazeley’s UK and European development portfolio.
There was disagreement over the valuation of Gazeley’s undeveloped landbank of 1,650 acres on 29 sites in the UK and continental Europe.
“The suspicion has to be that the discussions will continue at some level or with other parties,” said a source. “It’s something that certainly might happen at some point.”
If the deal were consummated it would significantly increase the market share of the world’s largest industrial developer.
In the year to December 2003, Gazeley made £16.9m in profit, with a turnover of £55.4m.
The last produced accounts, published before ASDA was taken over by Wal-Mart, showed a net asset value of £125.2m.
ProLogis’s market value was $12.4bn (£6.7bn) at the end of April, before the deal, and it now boasts control of 350m sq ft of distribution space in over 2,000 sites around the globe.
It is only two weeks since ProLogis announced the acquisition of US real estate investment trust Catellus for $4.6bn (£2.5bn).
A spokesman for Gazeley confirmed that talks had taken place: “ProLogis expressed a serious interest in buying Gazeley earlier this year.” But he denied that talks might restart.
“Gazeley parent company ASDA/Wal-Mart has confirmed that it has no interest in selling the company.
“Indeed, ASDA/Wal-Mart has made clear that the specialist logistics developer has a long-term role to play as part of the group’s core business, both in the UK and Europe.”
Alan Curtis, managing director of ProLogis in Europe, said: “We do not comment on speculation relating to our business activities.”
Last week, ProLogis announced its intention to double the size of its UK business and the poaching of Gazeley managing director Andrew Griffiths. He has joined the company as deputy managing director and senior vice-president of operations in the UK.
Griffiths’ mandate, said ProLogis, “will be to work alongside Alan Curtis to accelerate growth in ProLogis’s UK business”.
Curtis said: “There is always room for the best talent in the market, and Andrew clearly fits that bill.
“I will look to him to drive our plan to double the size of our business, a process that is now under way with our 2005 new-start program of 4.5m sq ft.”
ProLogis’s main US competitor, Panattoni which develops more than 10m sq ft pa across the Atlantic announced its intention to enter the UK and European markets in February and has set up an office in Hanover Square, W1.
References: EGi News 27/06/05
