Segro (SGRO), the FTSE 100 warehouse landlord, has rejected a £12.6bn takeover approach from American rival Prologis (PLD) in the latest transatlantic corporate battle.
Prologis went public with its offer after Segro’s board “unequivocally rejected” the approach, despite the bid valuing the company at almost 25% above its market price at Tuesday’s close.
Under the terms of the all-share proposal, Segro shareholders would have received 0.084 Prologis shares for each share they hold, implying a value of 925p per Segro share.
That figure represents a 24.6% premium to Segro’s closing price on Tuesday, a significant uplift that the board nonetheless dismissed without hesitation.
Segro’s shares surged nearly 17.5% on Wednesday to 871p, making them the top riser in London’s FTSE 100 index.
The company said its board had unanimously rejected the offer from Prologis as it “falls a long way short of Segro’s own views on value.”
Segro is best known for developing and leasing large warehouse facilities to support the boom in online shopping, with tenants including Amazon and Netflix.
The company called Prologis’s offer “opportunistically timed,” accusing its US rival of having “sought to take advantage of the clear dislocation between Segro’s current share price and its highly attractive underlying business and strong prospects.”
Segro attributed its depressed share price partly to “major geopolitical issues which have adversely impacted trading valuations across the UK and European real estate sectors” relative to their US counterparts.
Segro’s shares soared during the Covid pandemic but have since fallen around 40% from their peak at the end of 2021, as sentiment across the real estate sector cooled sharply from the spring of 2022 onwards.
The company also highlighted its large development pipeline, which includes datacentres, as a key part of its underlying value that the Prologis bid fails to properly reflect.
Segro traces its origins to 1920 when a military repair depot in Slough was converted into one of Britain’s earliest modern industrial estates, with the company formally standing for the Slough Estates Group.
Its Slough trading estate now hosts what the company describes as the second largest portfolio of datacentres in the world, a factor believed to have fuelled Prologis’s interest.
Oli Creasey, the head of property research at wealth manager Quilter Cheviot, said the bid 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.”
Dan Coatsworth, the head of markets at broker AJ Bell, warned of broader consequences for the London market if the deal were to proceed at any price.
“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.