Wire flash
FinancePrologis intensifies pursuit of Segro after $16.6 billion all-stock offer rejected
Editorial responsibility
- No named human review is recorded for this page.
- Source reporting is collected, normalized, translated or condensed automatically when needed.
- Automatically published source-backed update
Prologis, a US-based logistics real estate investment trust, is pressing its takeover bid for UK-based Segro after an all-stock offer valued at £12.6 billion ($16.6 billion) was rejected last week. Prologis outlined the strategic benefits of the deal on Tuesday, claiming it would unlock value for Segro shareholders through access to its larger network and 'fortress balance sheet,' while criticizing Segro's lagging returns and reliance on dilutive equity. Segro's chairman, Andy Harrison, dismissed the offer as 'inadequate, opportunistic and one-sided,' asserting the company's standalone growth prospects are superior. The proposed combination would more than triple Segro's European footprint to 363 million square feet and enhance its data center development. Market reaction has been mixed, with Prologis shares falling 2.2% and Segro shares rising 7.8%.
Source report
Author: Todd Maiden Source: FreightWaves
Prologis has intensified its pursuit of Segro after the London-based logistics warehouse operator rejected a £12.6 billion ($16.6 billion) takeover bid last week. On Tuesday, the San Francisco-based real estate investment trust further outlined its financial and strategic rationale for the combination.
Key Details of the Offer
- Transaction type: All-stock
- Premium offered: 25% above Segro's share price
- Exchange ratio: 0.084 new Prologis shares per Segro share
- Post-closing ownership: Segro shareholders would hold approximately 10.5% of Prologis' share capital
Prologis' Rationale
Prologis stated that the deal would unlock significant value for Segro (LSE: SGRO) shareholders, beyond the initial premium. Key arguments include:
- Access to larger network: Segro would benefit from Prologis' extensive logistics real estate network and "fortress balance sheet."
- Addressing underperformance: Prologis cited "lagging earnings and dividend growth" and claimed Segro trades at a discount due to reliance on dilutive equity issuances for funding.
- Unlocking development potential: "Prologis' access to public and private capital will enable Prologis to unlock and accelerate the embedded value of SEGRO's development and data center pipeline which Prologis believes SEGRO is unable to fully realize on a standalone basis given its balance sheet capacity and persistent trading discount," the company said in a news release.
- Shareholder returns comparison: Over the past five years, Segro's total shareholder returns declined by 20.1%, while Prologis generated a 38.6% return.
Scale and Strategic Benefits
The combined entity would:
- More than triple Segro's European footprint to 363 million square feet
- Gain a nearly 3,000-acre land bank for future development projects
- Leverage Prologis' dedicated data center and energy teams to better monetize Segro's existing data center pipeline
This acquisition would be Prologis' largest since its $26 billion acquisition of Duke Realty in 2022.
Segro's Rejection and Response
Segro continued to oppose the transaction on Tuesday, describing the offer as "inadequate, opportunistic and one-sided."
Andy Harrison, chairman of Segro, stated: "Prologis is trying to acquire SEGRO on the cheap when our share price has been dislocated by the Middle East conflict and at a price that reflects none of the quality, scarcity and growth embedded in the business. We have unanimously rejected their Proposal because we continue to believe our compelling standalone investment case can deliver superior shareholder value. Capital is not a constraint on our ability to unlock all of this value for our shareholders."
Market Reaction
- Prologis (NYSE: PLD): Shares down 2.2% as of 10:24 a.m. EDT on Tuesday.
- Segro (LSE: SGRO): Shares up 7.8%.
Prologis' all-stock offer represents a 25% premium for Segro's shareholders. (Photo: Jim Allen/FreightWaves)
Data sources: Yahoo Finance, FreightWaves
Source
Yahoo FinanceWestern
Part of this Story
US REIT Prologis Presses £12.6bn Takeover Bid for UK's Segro, Rejected