AMB Property and ProLogis agree to merge

ProLogis, the world’s largest warehouse operator, has agreed to merge with AMB Property Corp., creating a real estate company that will own or manage $46 billion in assets.

ProLogis shareholders will receive 0.4464 of AMB common stock for each of their shares and own 60% of the combined company, the companies said in a statement Monday. That values ProLogis at about $8.58 billion, based on AMB’s closing price.

The combination of the two biggest industrial real estate investment trusts will help lower their costs as the U.S. market rebounds. The vacancy rate for industrial space is falling, indicating rising demand for warehouse space, commercial real estate broker Grubb & Ellis Co. said.

When the merger talks were announced Thursday, Denver-based ProLogis had a market value of $8.7 billion and San Francisco-based AMB was worth $5.5 billion.

ProLogis shares fell 29 cents, or 1.9%, to $14.92 on Monday, while AMB shares climbed 62 cents, or 1.9%, to $33.55.

The new company will be called ProLogis. ProLogis Chief Executive Walter Rakowich and Hamid Moghadam, AMB’s chief executive, will be co-CEOs through 2012. Rakowich will then retire and Moghadam will become sole CEO.

The new company’s corporate headquarters will be in San Francisco, while its operations will be based in Denver.