Prologis approach sends Segro shares up 16% despite rejection
Prologis Inc on Wednesday revealed it has approached Segro PLC with an all-share takeover proposal valuing the UK warehouse landlord at around £12.6 billion, but said the offer was rejected by Segro’s board.
Shares in Segro jumped 16% to 859.60 pence on Wednesday morning in London, making it the top performer in the FTSE 100, while the blue-chip index was up 0.1%.
The San Francisco-based logistics real estate investment trust said it sent a letter to Segro’s board on June 16 outlining a possible combination under which Segro shareholders would receive 0.084 new Prologis shares for each Segro share.
Based on Prologis’ closing share price of $145.30 on Tuesday and a GBP/USD exchange rate of 1.32, the proposal implies a value of 925 pence per Segro share and values the entire issued and to-be-issued share capital of Segro at approximately £12.6 billion.
Prologis said the proposal represented a 24.6% premium to Segro’s closing share price of 742p on Tuesday, a 26.7% premium to its one-month volume-weighted average share price and a 31.4% premium to its three-month average.
The company said Segro’s board ‘unequivocally rejected’ the proposal on Tuesday.
Prologis argued the transaction would give Segro shareholders exposure to the world’s largest logistics real estate investment trust, with a market capitalisation of $140.9 billion, while retaining approximately 10.5% ownership of the combined group.
‘Segro shareholders would receive shares in the world’s largest logistics REIT... unlocking, on closing, significant upside to the current share price,’ Prologis said.
The US company said the combination would provide access to a broader global platform, stronger balance sheet and greater capital resources, which it believes could accelerate the development of Segro’s logistics and data centre pipeline.
Prologis also highlighted its lower leverage, noting net debt to enterprise value of 22% compared with 37% for Segro, and net debt to adjusted Ebitda of 4.8 times versus 8.4 times.
The company said it believes Segro has been constrained by its balance sheet and persistent discount to EPRA net tangible assets, and argued that a combination would unlock growth opportunities that may be difficult to achieve on a standalone basis.
Prologis urged Segro shareholders to encourage the board to engage and allow a binding offer to be considered.
Under UK takeover rules, Prologis must by July 22 either announce a firm intention to make an offer or confirm that it does not intend to proceed, unless the deadline is extended by the Takeover Panel.
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