When number 1 eats number 2

Shockwaves rippled through the industrial sector last month when it was announced that US developer ProLogis has bought the warehousing business of UK firm Parkridge Holdings in the largest acquisition of its type in European history

According to the terms of the deal, ProLogis has now taken over 100 pct of Parkridge’s warehousing and 25 pct of its retail warehousing and retail operations, after the British company accepted an offer of USD 581 mln. In a separate deal, ProLogis acquired from Parkridge’s JV partner its 50 pct holding in the Central European venture for USD 449 mln, as well as paying offLogistics super-giant

As well as Parkridge’s UK and western European warehousing, ProLogis is the new owner of its central and eastern European real estate – the majority of which lies in Poland and is run by its industrial division in the country, Parkridge CE Developments. ProLogis has already established itself as the largest warehouse developer in Poland in terms of leased and pipeline stock, with Parkridge in second place. What the deal means for this country is that the biggest industrial developer has taken over the second biggest to create what is in effect a logistics super-giant.

Perhaps almost as astounding as the scale of the take-over is the fact that it was agreed between two such rival companies. Tomasz Olszewski, head of the industrial department at Cushman & Wakefield, is amongst those who were taken aback by the deal. “Nobody expected this in Poland,” says Mr Olszewski. “Parkridge have been doing very well. Maybe in the long run we might have predicted something like this, but

I think it was big surprise for everyone.” But he does offer us his own theory about the acquisition: “Nothing is not for sale, as the saying goes. What is not surprising is that ProLogis was willing to buy Parkridge, as it strengthens their position in both western and central Europe, and it is also not surprising that Parkridge accepted the very good offer they were given.”

a different version of events. According to him, the two firms had been in discussions over a smaller deal, talks which took on a larger scope once both parties examined each other’s businesses and saw how complementary they were. In his opinion, one big advantage for ProLogis was in acquiring Parkridge’s “land banks in the UK, western Europe and the CEE countries, as well as their works in progress.” For Parkridge’s part, Mr Anderson believes that   that their retail business could benefit too from the injection of capital.”

a multitude of products, you are at an advantage over companies who are only able to offer one type of product,” claims Mr Anderson.

Should we now expect more such transactions, and are we now entering a period of consolidation when the big boys devour the smaller ones? Ben Bannatyne thinks so: “I’m sure there will be other such deals as there are a number of other players who are building up portfolios across CEE, such as Panattoni, Slough Estates and Pinnacle.”