UPDATE: Segro says Prologis bid not worthy of "further engagement"

Segro PLC on Thursday affirmed a takeover tilt from Prologis Inc is "inadequate, opportunistic and one-sided".

In June, San Francisco, California-based Prologis made an all-share proposal under which Segro shareholders would receive 0.084 new Prologis shares for each Segro share. Segro rejected the approach.

Prologis shares closed 1.8% lower at USD141.00 each in New York on Wednesday.

Segro said that based on current market prices and exchange rates, the offer values each of its shares at 886 pence, the company as a whole at around £12.0 billion.

Segro shares traded 0.5% lower at 860.80p each in London on Thursday morning, giving it a £11.65 billion market capitalisation. Segro shares are up around 29% over the past 12 months.

Segro, in response to Prologis earlier on Thursday saying engagement "remains the best path" for shareholders, once again said the New York listing is attempting to acquire it "on the cheap".

"The board takes its fiduciary duties very seriously, but the value of Prologis's current, rejected proposal does not reflect any basis for further engagement," Chair Andy Harrison said.

"Prologis's latest announcement and presentation are consistent with its attempt to buy Segro on the cheap. Its proposal fails to reflect the quality, scarcity and growth embedded in our business and is an inadequate, opportunistic and one-sided alternative that would dilute our shareholders' exposure to our unique and irreplicable portfolio and outstanding prospects."

Prologis hailed its own data centre offering, where it said it has a "proven track record for execution".

"Segro shareholders have the opportunity to benefit from a more experienced, larger and better-capitalised data centre platform that can capture and maximise the long-term value of both companies' data centre pipelines as well as the upside from Prologis' broader embedded power potential," Prologis said.

Prologis argued that Segro faces capital constraints as a standalone business, evidenced by its "reliance on project-level joint ventures". A tie-up with Prologis offers a "stronger path to value creation" for shareholders than project-level joint-ventures, it added.

"It would allow Segro shareholders to participate in the upside of Segro's pipeline while benefiting from Prologis' scaled, global platform, fortress balance sheet and established strategic capital platform," Prologis said.

Prologis argued that consensus points to "lacklustre" earnings grow for Segro over the next three years, particularly when compared to peers in the European logistics space.

Prologis puts consensus for compound annual earnings per share growth at 4.7% for the 2025 to 2028 period, lagging the 7.1% for the peer group.

"That growth outlook does not support a premium market valuation particularly given that Segro already trades on a much higher price to earnings ratio than its European logistics peers," Prologis warned.

Segro on Wednesday outlined financial targets and a pathway to "superior value creation" for shareholders as it seeks to ward off the interest of Prologis.

Segro flagged substantial embedded value in its industrial and logistics development pipeline with the potential to deliver an additional £429 million of potential future headline rent.

The FTSE 100-listing said it is also well-placed to capitalise on Europe's fast-growing data centre opportunity with a pipeline of near to mid-term opportunities offering £460 million of income potential.

Outlining a path to adjusted earnings per share of 50 pence by 2030 from 36.6p in 2025, Segro said it has more than £1 billion of incremental rental income growth potential embedded in its existing portfolio and development pipelines.

This includes upside from its existing portfolio, potential from industrial, logistics and data centre pipelines combined, and selective redevelopments of existing assets.

The share of data centre net rental income is expected to rise from 7% now to more than 30% by 2035.

Reflecting this planned growth, Segro announced a second 50/50 joint venture with Pure Data Centres Group Ltd to develop a fully fitted data centre in Paris, targeting a pre-let with a global hyperscaler.

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