Global Logistic Properties (MC0.SG) is flat at S$2.12 in muted trade, shrugging off news AMB Property Corp. (AMB) and Prologis (PLD) Thursday confirmed the two companies were discussing a potential merger of equals. UBS analysts Michael Lim and Adrian Chua say if the deal proceeds, “it would create a global industrial powerhouse.” 

They note GLP’s competitive landscape in Japan could intensify, (PLD/AMB would have combined Japan logistic NLA of around 1.5 million square meters, 42% smaller than GLP’s) but “PLD/AMB would have a greater ability to leverage its combined network and could also intensify competition for acquisition and development growth. This, in turn, would challenge GLP’s plans to pursue greenfield projects through its Japan fund.”

 

They add, a PLD/AMB entity does not alter GLP’s China leadership dynamics as PLD does not have a China footprint or development pipeline. UBS keeps its Buy rating and $2.71 target; “nonetheless, we think this newsflow could weigh on investor sentiment although we do not foresee any near-term impact.”