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Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

NOTE 20. SUBSEQUENT EVENTS

 

Acquisition of Liberty Property Trust

 

On February 4, 2020, Liberty, Liberty OP and New Liberty Holdco merged with and into Prologis, Inc., Prologis L.P., Prologis Merger Sub and Prologis OP Merger Sub, pursuant to which, (i) an indirect wholly owned subsidiary of Liberty merged with and into Liberty, with Liberty continuing as the surviving entity and an indirect wholly owned subsidiary of New Liberty Holdco (the “Company Merger”), (ii) thereafter, New Liberty Holdco merged with and into Prologis Merger Sub, with Prologis Merger Sub continuing as the surviving entity and remaining a wholly owned subsidiary of Prologis, Inc. (the “Topco Merger”), (iii) thereafter, Prologis, Inc. and its applicable subsidiaries and Prologis Merger Sub caused all of the outstanding equity interests of Liberty to be contributed to Prologis L.P. in exchange for the issuance by Prologis L.P. of Prologis L.P. common units to other subsidiaries of Prologis, Inc. and (iv) thereafter, Prologis L.P. Merger Sub merged with and into Liberty OP, with Liberty OP continuing as the surviving entity and a wholly owned subsidiary of Prologis L.P. (the “Partnership Merger” and, collectively with the Company Merger and the Topco Merger, the “Mergers”). The total acquisition price was approximately $13 billion through the issuance of equity based on the value of the Prologis common stock issued using the closing price on February 3, 2020 and the assumption of debt.

 

In connection with the transaction, at the effective time of the Topco Merger, each issued and outstanding Liberty common share as of immediately prior to the Company Merger was converted automatically into the right to receive 0.675 shares of Prologis, Inc. common stock. At the effective time of the Partnership Merger, each issued and outstanding common unit of Liberty OP as of immediately prior to the Partnership Merger was converted into 0.675 common units of Prologis L.P. After consideration of all applicable factors pursuant to the business combination accounting rules, we expect to treat the Mergers as an asset acquisition and as a result the transaction costs will likely be capitalized to the basis of the acquired properties.

 

In connection with the Mergers, on November 27, 2019, Liberty and Liberty’s board of directors (the “Liberty Board”) were sued in a putative class action lawsuit, the Stein Action, filed in the United States District Court for the District of Maryland, in connection with Liberty’s proposed merger with Prologis and the related Form S-4. On December 5, 2019, Liberty, Liberty OP, the Liberty board, Prologis, Inc., Prologis L.P., Prologis Merger Sub, Prologis OP Merger Sub and New Liberty Holdco were sued in another putative class action lawsuit, the Thompson Action, also filed in the United States District Court for the District of Delaware, and also in connection with Liberty’s proposed merger with Prologis and the related Form S-4. On December 16, 2019, Liberty and the Liberty Board were sued in a third putative class action lawsuit, the Berlinger Action, filed in the United States District Court for the District of Maryland, also in connection with Liberty’s proposed merger with Prologis and the related Form S-4. On December 16, 2019, Prologis, Liberty and the Liberty Board were sued in a fourth putative class action lawsuit, the Garfield Action, filed in the Court of Common Pleas of Dauphin County, Pennsylvania, also in connection with Liberty’s proposed merger with Prologis and the related Form S-4. Subsequently, in January 2020, the plaintiff in the Garfield Action agreed to dismiss his action with prejudice as to himself and without prejudice as to the remainder of the purported class. On December 19, 2019, Liberty and the Liberty Board were sued in a fifth putative class action lawsuit, the McDonough Action, filed in the United States District Court for the District of New Jersey, also in connection with Liberty’s proposed merger with Prologis and the related Form S-4. On December 20, 2019, Liberty and the Liberty Board were sued in a sixth putative class action lawsuit, the Hagerty Action, filed in the United States District Court for the Southern District of New York, also in connection with Liberty’s proposed merger with Prologis and the related Form S-4. On January 7, 2020, Liberty and the Liberty Board were sued in a seventh putative class action lawsuit, the Yonchuk Action, filed in in the United States District Court for the District of Maryland, in connection with Liberty’s proposed merger with Prologis and the related Form S-4.

 

The complaints in the Stein Action, Berlinger Action, McDonough Action, Hagerty Action and Yonchuk Action allege that Liberty and the Liberty Board violated federal securities laws by omitting material information from the Form S-4, rendering the Form S-4 materially deficient. The complaint in the Thompson Action alleges the Liberty, Liberty OP and the Liberty Board violated federal securities laws by omitting from the Form S-4, and misrepresenting in the Form S-4, material information, rendering the Form S-4 materially deficient.

 

In all six outstanding actions, the plaintiffs seek, among other things, (i) rescission of the transaction and/or (ii) damages, and (iii) attorneys' fees and costs in connection with these lawsuits. Although the ultimate outcome of litigation cannot be predicted with certainty, we believe that these lawsuits are without merit and intend to defend against these actions vigorously.