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FinancePrologis presses Segro after $16.6B all-stock takeover offer rejected
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Prologis, a US-based real estate investment trust, is intensifying its pursuit of UK logistics warehouse operator Segro after Segro rejected a £12.6 billion ($16.6 billion) all-stock takeover bid. Prologis argues the deal would unlock significant value for Segro shareholders, citing a 25% premium, access to a larger logistics network, and a 'fortress balance sheet.' It claims Segro's standalone performance has lagged, with total shareholder returns declining 20.1% over five years versus Prologis' 38.6% gain. The combined entity would more than triple Segro's European footprint to 363 million square feet. Segro's chairman rejected the offer as 'inadequate, opportunistic and one-sided,' citing dislocation from the Middle East conflict. Market reaction was mixed, with Prologis shares down 2.2% and Segro shares up 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, Prologis further outlined its financial and strategic rationale for the proposed combination.
Offer Details
The San Francisco-based real estate investment trust stated that the all-stock transaction would unlock significant value for Segro shareholders beyond the initial 25% premium to share price. Under the terms:
- Segro shareholders would receive 0.084 new Prologis shares for each share held
- They would hold approximately 10.5% of Prologis' share capital after closing
Prologis' Strategic Case
Prologis (NYSE: PLD) argued that the deal provides Segro with access to its larger logistics real estate network and its "fortress balance sheet." The company cited "lagging earnings and dividend growth" and claimed that Segro trades at a discount due to its reliance on dilutive equity issuances for funding.
In a news release, Prologis stated:
"Prologis' access to public and private capital that 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."
Prologis also noted that Segro's total shareholder returns declined by 20.1% over the past five years, compared to Prologis' 38.6% return.
Potential Impact of the Combination
The merger would significantly expand scale across the U.K. and Europe:
- European footprint: More than tripled to 363 million square feet
- Land bank: Nearly 3,000 acres for future development projects
Prologis also highlighted its dedicated data center and energy teams, which it said would enable Segro to better monetize its existing data center pipeline.
The transaction would be Prologis' largest since its $26 billion acquisition of Duke Realty in 2022.
Segro's Response
Segro continued to resist the offer on Tuesday, describing it as "inadequate, opportunistic and one-sided."
Andy Harrison, chairman of Segro, commented:
"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 (PLD): Down 2.2% as of 10:24 a.m. EDT on Tuesday
- Segro (SGRO.L): Up 7.8%
This article originally appeared on FreightWaves.
Source
Yahoo FinanceWestern
Part of this Story
US REIT Prologis Presses £12.6bn Takeover Bid for UK's Segro, Rejected