US warehouse and distribution center owner ProLogis (PLD.N) is substantially larger than rival AMB Property Corp (AMB.N) both in terms of square footage and market value.

Yet if the two companies’ recently announced talks on a “merger of equals” pan out, AMB Property is likely to be the real buyer and ProLogis the target, investors and Wall Street analysts said.

That is because ProLogis, whose massive debt load brought the company to its knees at the end of 2008 and prompted CEO Jeffrey Schwartz to resign, is entering the deal from a position of weakness.

“This is two parties coming together and saying how can we make this work in a way that’s beneficial to both, even though AMB is buying ProLogis,” said Ian Goltra, portfolio manager with Forward Management, which has $6.0 billion of assets under management, of which US$1.5 billion ($1.9) is real estate investment trust securities. “ProLogis coming in under their wing is a big positive to the company.”

Late Wednesday, the two companies said they were in talks “regarding a potential merger of equals, in which the two companies would combine in an all-stock, at-market transaction.”

Both companies said they would not comment further.