The UK warehouse landlord Segro is at the centre of the latest transatlantic takeover battle after rejecting a £12.6bn takeover approach from the US rival Prologis.
Prologis has gone public with its offer for the FTSE 100 company after it was “unequivocally rejected” by Segro’s board on Tuesday despite valuing the company at almost 25% more than its market value at that day’s close.
In an appeal to Segro’s shareholders to get the company to engage, Prologis set out in a statement that under the terms of its all-share takeover proposal, shareholders in Segro would have received 0.084 Prologis shares for each share they hold. This implies a value of 925p for each Segro share, representing a 24.6% premium to Segro’s closing price on Tuesday.
Segro is best known for building cavernous sheds to support the boom in online shopping, developing and renting buildings to companies such as Amazon and Netflix.
Its shares jumped by nearly 17.5% on Wednesday to 871p, making them the top riser in London’s FTSE 100.
The company said in a statement that its board had unanimously rejected the offer from Prologis as it “falls a long way short of Segro’s own views on value”.
Segro’s business took off and its shares soared during the Covid pandemic when consumers were confined to their homes, creating huge demand for deliveries and putting pressure on warehouse space.
However, its shares began to slide in the spring of 2022 and are now trading about 40% lower than they were at their peak at the end of 2021.
The company called Prologis’s offer “opportunistically timed” and said its US rival had “sought to take advantage of the clear dislocation between Segro’s current share price and its highly attractive underlying business and strong prospects”.
Segro said its share price was partly because of “major geopolitical issues which have adversely impacted trading valuations across the UK and European real estate sectors” relative to their US counterparts.
It added that Segro had a large development pipeline, including datacentres.
Oli Creasey, the head of property research at the wealth manager Quilter Cheviot, said Prologis’s offer would send ripples through the UK’s real estate investment trust sector.
He said: “It remains to be seen whether the combination will go ahead – in our view Prologis would be reluctant to increase the offer materially … the entire sector could be back in the shop window for even larger, foreign companies.”
Segro stands for the Slough Estates Group, after the town on the western fringes of London where it began life as the Slough Trading Company in 1920, when a military repair depot was turned into an early example of a modern industrial estate.
The tenants of Segro’s building have changed with the times and the company says its Slough trading estate is now home to the second largest portfolio of datacentres in the world.
The company’s pipeline of datacentres has helped stoke Prologis’s interest in Segro but the US company may need to improve its offer, according to Dan Coatsworth, the head of markets at the broker AJ Bell.
“Should Prologis succeed with its pursuit, it would represent yet another large-cap loss from the UK market and a diminution in its breadth and quality,” he said.
