Warehouse property developer Segro has rejected a £12.6 billion takeover approach from US rival Prologis, as the wave of overseas bids for British firms continues.
Proposal details
San Francisco-based Prologis revealed it had put forward a proposal to buy FTSE 100 firm Segro worth 925p a share on June 16, which it said was rejected on June 23. Under the deal, Segro shareholders would own around 10.5% of the combined group, according to Prologis.
Segro said the proposed offer “falls a long way short of Segro’s own views on value”, but shares in the group rallied 16% on hopes over a higher offer. Its board said it believed the approach was “opportunistically timed and sought to take advantage of the clear dislocation between Segro’s current share price and its highly attractive underlying business and strong prospects”.
Context of takeover bids
Prologis said it was going public with the approach in an attempt to get the backing of Segro investors. It comes amid a flurry of takeover tilts for UK firms, with easyJet on Monday rebuffing US investment fund Castlelake’s £4.74 billion takeover approach as an attempt to buy it “on the cheap”. Last week, UK-listed laboratory testing company Intertek agreed a £9.5 billion takeover by Swedish investor EQT, dealing another blow to the London market.
The bid interest in Segro comes after Segro shares have dropped sharply since reaching a peak in 2021 above £14 a share, falling to just over £6 a share last year. The stock was worth £7.42 at market close on June 23, before the Prologis proposal was made public.
Segro's response
Segro said its share price has been depressed by “major geopolitical issues which have adversely impacted trading valuations across the UK and European real estate sectors relative to the US real estate investment trust (Reit) sector”. The firm added it has a “clear strategy, supported by a strong balance sheet and a proven operating platform”. “The board remains very confident in Segro’s ability to capture substantial value for its shareholders during the coming years,” it said.
Prologis urges engagement
Prologis said it “urges Segro shareholders to encourage the Segro board to engage with Prologis to allow a binding offer to be put to Segro shareholders for their consideration”. It said: “Prologis believes that the combination is a highly compelling opportunity for Segro shareholders. Segro shareholders would receive shares in the world’s largest logistics real estate investment trust with a 140.9 billion US dollar market capitalisation, unlocking, on closing, significant upside to the current share price.”
The suitor has until 5pm on July 22 to make a firm bid for Segro or walk away under City takeover rules.
