Prologis raises Segro bid to £13.5B, adds cash option

Prologis ↘ 1.41% disclosed on Monday a third takeover proposal for UK warehouse landlord Segro, now including a partial cash alternative that values the company at 993 pence per share, or approximately £13.5 billion ($18.2 billion). Segro's board unanimously rejected the offer on July 17, one day after it was submitted, setting the stage for a showdown before Prologis faces a deadline of 5:00 p.m. London time on Wednesday, July 22, to either announce a firm intention to make an offer or walk away under UK Takeover Code rules.streetinsider+2

A Richer Offer

The revised proposal offers 0.0890 new Prologis shares for each Segro share, a 6% increase over the initial exchange ratio of 0.084. It also introduces a partial cash alternative of up to £2.7 billion, representing 20% of total consideration, at a fixed price of 1,000 pence per Segro share, subject to pro-rata scale-back.rttnews+2

Based on Prologis's closing share price of $149.79 and a GBP/USD exchange rate of 1.3445 on July 17, the blended value assuming a shareholder elects for 20% cash comes to 993 pence per share. Prologis said this represents a premium of 33.8% to Segro's closing price of 742 pence on June 23, the day before the offer period commenced, and a 9.7% premium to Segro's pro forma adjusted net asset value of 905 pence per share as of June 30.streetinsider+2

Segro shares fell around 2% following the announcement, according to the Halifax share dealing service.investments.halifax

Escalating Pressure

The third proposal marks a rapid escalation by the world's largest industrial property owner. Prologis first approached Segro on June 16 with an all-share bid at 925 pence per share, which Segro called "opportunistic" and unanimously rejected on June 23. A second proposal was rejected on July 12, according to The Wall Street Journal.costar+2

In between, Prologis went directly to Segro shareholders, urging them to pressure the board into engagement. Bloomberg reported in early July that several Segro investors were pushing Prologis to improve its offer. Prologis also published materials arguing the combination would create a "credible path to value creation" through scale and a combined European portfolio.bloomberg+2

What Comes Next

With the Tuesday deadline approaching, Prologis stated there remains "no certainty that a firm offer will be made." Under UK takeover rules, if Prologis does not announce a firm intention by 5:00 p.m. London time on July 22, it must withdraw and cannot make another approach for at least six months.mainsights+2

Segro, the UK's largest listed real estate investment trust and a constituent of the FTSE 100, has maintained that each successive proposal "significantly undervalues" the company, pointing to its data centre land bank and logistics portfolio across Europe.investing+1