Segro has reversed course and agreed to recommend a £14bn takeover bid from US warehouse giant Prologis, marking one of the largest foreign acquisitions of a UK-listed company in recent memory.
The FTSE 100 landlord’s board said it had “unanimously concluded” it would recommend shareholders accept what Prologis described as its “best and final offer”, submitted just hours before a regulatory deadline.
The announcement came nearly a month after Segro rejected an initial £12.6bn approach from Prologis, along with two subsequent revised offers made in the weeks that followed.
Prologis’s revised proposal offered 0.092 new shares for each Segro share, valuing the UK company at £10.32 per share, representing a 3.9% premium to its previous proposal and a 9.5% increase above its original June approach.
Under the deal’s terms, Segro shareholders would also be entitled to receive a permitted dividend, and Segro has asked Prologis to commit to establishing a secondary listing for Segro on the London Stock Exchange.
Prologis had faced a “put up or shut up” deadline of 5pm UK time on Wednesday under the UK’s takeover code, but that deadline has now been extended by three weeks to 5pm on 12 August.
California-based Prologis said it welcomed the additional time and was willing to work constructively with the Segro board to reach a final outcome, though its shares fell by as much as 3% during morning New York trading before recovering slightly.
The board’s reversal came just hours after major Segro investor Norges Bank Investment Management, Norway’s sovereign wealth fund, publicly urged the UK company to engage with Prologis, saying it understood “the strategic rationale for a combination.”
Norges held an 8.3% stake in Segro and a 1.3% stake in Prologis at the end of June, giving it a significant financial interest in the outcome of negotiations between the two companies.
Segro, which takes its name from the Slough Estates Group, traces its roots to 1920 when a military repair depot near London was transformed into one of Britain’s earliest modern industrial estates.
The company now owns 10.9 million square metres of space across Europe, and its Slough trading estate has evolved to become home to what Segro says is the second largest portfolio of datacentres in the world.
Both Segro and Prologis, which counts Amazon, FedEx and UPS among its tenants, have been expanding into datacentres to capitalise on surging demand from the artificial intelligence sector.
Segro’s shares had been trading around 40% below their pandemic-era peak before news of Prologis’s first approach emerged in June, after soaring during the Covid years when demand for warehouse space surged alongside the e-commerce boom.
Segro’s long-serving chief executive David Sleath had previously dismissed Prologis’s initial offer as “opportunistically timed”, insisting the company could deliver “strong prospects” for shareholders through its own development pipeline, with the two sides having history dating back to rejected bids as far as March 2024.
The deal adds to a growing wave of overseas acquisitions targeting British companies, with laboratory testing firm Intertek recently backing a £10.6bn approach from a private equity firm owned by Sweden’s billionaire Wallenberg family, and easyJet’s board also giving the green light to a possible £5.7bn offer from US private equity firm Apollo.