The Segro board has dramatically reversed course and agreed to recommend a £14bn takeover bid from US rival Prologis, marking one of the largest foreign acquisitions of a UK-listed company in recent years. The board unanimously concluded that Prologis’s revised offer, valuing each Segro share at £10.32, should be accepted by shareholders. This U-turn comes after nearly a month of rejections and three previous approaches from California-based Prologis.
Why Did Segro Change Its Mind on the Takeover Bid?
Initially, Segro rebuffed a £12.6bn proposal, citing undervaluation. However, Prologis increased its offer to 0.092 new shares per Segro share, a 3.9% premium over the prior bid and 9.5% above the first approach. Crucially, Norges Bank Investment Management, a major investor holding 1.3% of Segro and 8% of Prologis, urged the UK company to engage. Under pressure from shareholders and a looming “put up or shut up” (PUSU) deadline, Segro’s board relented.
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Comparison of Prologis Offers
| Offer Stage | Value per Share | Total Valuation |
|---|---|---|
| Initial Approach (June) | ~£9.42 | ~£12.6bn |
| Previous Revised | ~£9.93 | ~£13.5bn |
| Final Offer (Current) | £10.32 | ~£14bn |
Under the terms, Segro shareholders are also entitled to a permitted dividend, and Prologis has been asked to secure a secondary listing on the London Stock Exchange for Segro. The PUSU deadline has been extended by three weeks to 12 August, giving both sides time to finalise details.
Key Takeaways from the Segro-Prologis Deal
- One of the largest foreign takeovers of a UK-listed company in recent years.
- Segro shareholders will receive 0.092 new Prologis shares per Segro share plus a dividend.
- The London stock market faces another blow as a major FTSE 100 company exits.
- Prologis’s shares fell 3% in New York, reflecting market skepticism about the price.
- Norges Bank’s intervention was pivotal in pushing Segro to negotiate.
Implications for the UK Market
This takeover adds to concerns about the attractiveness of the London Stock Exchange for large companies. With Segro’s departure, investors worry that UK-listed firms are undervalued and vulnerable to foreign acquirers. However, the deal includes commitments to maintain a UK listing for Segro operations, which may soften the blow.
Prologis, the world’s largest warehouse landlord, sees Segro’s prime logistics assets as essential to its global expansion. The combined entity would dominate the UK warehousing market, serving clients like Amazon and Netflix.
FAQ
What is the PUSU deadline?
PUSU stands for “put up or shut up”, a UK Takeover Code rule requiring a bidder to announce a firm intention to make an offer by a specified deadline or walk away. In this case, Prologis had until 5pm on Wednesday but the deadline has been extended to 12 August.
Why did Segro’s board initially reject the takeover bid?
Segro’s board believed the initial offers undervalued the company and its long-term growth prospects, especially given the demand for warehouse space from e-commerce and logistics firms.
How will this affect Segro shareholders?
Shareholders will receive Prologis shares and a dividend. They must approve the deal; the board recommends acceptance. Investors should consult their financial advisors before the shareholder vote.
This £14bn takeover bid reshapes the logistics real estate landscape and sets a precedent for future cross-border M&A. As the extended deadline approaches, market watchers will closely monitor regulatory approvals and shareholder sentiment.
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