Prologis blasts "unrealistic" assumptions in Segro's takeover defence

Prologis Inc on Tuesday claimed Segro PLC's bid defence relies on "unrealistic risk assessments and assumptions" as it continued to press the case for its hostile takeover offer.

Prologis is a San Francisco, California-based global real estate investment trust that, like Segro, focuses on logistics properties.

Prologis said it met with management of London-based Segro on Sunday to understand whether there was a "credible" path to securing recommendation by the Segro board but was left "disappointed" with the lack of clarity.

On Monday, Prologis sweetened its all-share offer for Segro and added a partial cash alternative.

It is offering 0.0890 of a new Prologis share for each Segro share, which valued the FTSE 100 listing at 993 pence per share, or £13.5 billion in total, when the offer was made. Prologis noted the offer price is a 9.7% premium to Segro's adjusted net asset value of 905p per share at June 30.

Later Monday, Segro reiterated the opportunity presented by its own growth strategy compared to the proposed takeover.

Segro said it met with Prologis management on Sunday "to understand Prologis' ability to improve its financial terms to a level that could be capable of being recommended by the board of Segro". No new information was provided by Prologis at the meeting, Segro said, and no improvement was made to the third offer.

But on Tuesday, Prologis said it believes that the Segro defence relies on "unrealistic risk assessments and assumptions to arrive at the various [net asset value] uplifts and earnings projections."

Proligis calculated that assuming earnings of 50 pence per share in 2030, as set out in Segro's presentation earlier in July, and taking its latest undisturbed share price to earnings multiple of 19.3 times, this implies an undiscounted share price for Segro of 964p in four years' time.

"We are offering Segro shareholders more than that today," it pointed out.

Prologis said it "remains convinced" that a combination would create substantial long-term value but added "highly disciplined capital allocation has always been fundamental to our strategy."

"We remain ready to engage constructively at any time in the interests of all shareholders," it said.

Shares in Segro were down 1.8% to 884.40p each in London on Tuesday. Prologis closed down 1.5% at USD147.48 in New York on Monday.

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