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GLP versus ProLogis.

Saturday, June 4, 2011

I was just reading an article in The EDGE and wonder what this would mean for GLP and its shareholders:

"GLP was listed on the SGX last year after it acquired the Japanese and Chinese portfolio of Prologis with the Singapore Government Investment Corp. (GIC) in 2008.

"Last December, GLP had to clarify that it did not disclose during IPO that a non-compete agreement with ProLogis was due to expire this February as the deal requires GLP not compete with ProLogis in Japan while ProLogis reciprocally does not compete in GLP’s core market of China.

"The clarification was made in response to a report in The Business Times that the prospectus for GLP’s initial public offer last October did not specifically disclose that the non-compete agreement was expiring in a couple of months."

Question. Was the non-disclosure misrepresentation on the part of GLP during its IPO? This is especially grave if the information omitted could have serious consequences for GLP's shareholders. I learned in business law many years ago that misrepresentation by omission is just as grave as misrepresentation through the giving of false information.

From a purely business perspective, I wonder how things would pan out in the next few years as ProLogis becomes more aggressive in its pursuit of growth in Asia. Is GLP up to the challenge? It did buy ProLogis' assets. I liken this to Akira asking an OEM to produce its products. Obviously, the OEM is the party with the knowledge and the production capabilities. If the OEM were to offer its products directly to the market, it could do so with an in-house brand and at a more competitive price. Consolation? Akira has a more established brand name but see what good it did for Akira? Did GLP have enough time to establish a strong brand name?

Of course, I am just thinking aloud here and playing the Devil's advocate. I am throwing the floor open to anyone, vested or not vested in GLP, to share any pertinent thoughts on the matter.

Related post:
GLP: A falling dagger?


Anonymous said...

In typical GLC or stat board fashion, they never apologize. Likely to see them brushing this as "an honest omission - remember that something ago, there as a Singtel deal where GST was omitted. The bill was like $330m (if I can still remember). Yet, no head rolls on the floor nor anyone behind bars. Why ? .... i leave it to best guess.

In this case, is there anyone with sufficient resources (a.k.a $$$$) to file a suit again GLP for this omission ?

After the Capita-(whatever) disappointments, I had learned not to trust any GLC.


AK71 said...

Hi SnOOpy168,

Indeed, a case of buyers beware? Hmmm...

Touzi said...

GLP a GLC ? Then I guess UBS also a GLC.

tf said...

I have since learnt not to buy anything if it is offered by Temasek, GIC or the likes. there will always be some surprise, either non full disclosure, or there is some sort of poor deal that was signed the manager.

bummy said...

Conceptually, whether this was a material fact that should have been disclosed is arguable. I would have preferred if they err on the side of caution and declared it.

Practically however, it matters little to me, how many of us really read the thick book at IPO ?

In the cut throat business world, competes and non competes are not uncommon. Expiration of non competes is not the end of the world for GLP nor will it be a win all for ProLogis. Much depends on what each company does and how other competitors position themselves. China and Japan are huge markets so realistically I do not believe this fact would materially change their business.

AK71 said...

Hi bummy,

It is good that you have such strong conviction in your investment decisions. I am happy for you and hope to see you riding this out and making lots of money. What you missed out on in SC Global, you might just gain back here. ;-p

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