Segro board U-turns on £14bn takeover bid by US rival Prologis

The board of Segro, a leading UK warehouse landlord, has reversed its earlier decision and agreed to consider a £14bn takeover bid from its US competitor, Prologis. The move marks a dramatic shift in the ongoing saga involving the FTSE 100-listed company, which manages vast industrial estates across Europe. In a statement issued late on Wednesday, the board announced it had unanimously decided to recommend that shareholders accept Prologis's latest offer, described by the American firm as its “best and final” proposal. The reversal followed a series of failed attempts by Prologis to secure control of Segro over the past several months. Initially, the UK company rejected a £12.6bn offer in June, citing concerns over timing and valuation. Subsequent proposals from Prologis were met with similar resistance, with Segro’s leadership arguing they were opportunistic. However, the latest offer, valued at £10.32 per share, includes a 3.9% increase over the previous proposal and a 9.5% rise compared to the initial bid. It also provides shareholders with the option of receiving a permitted dividend, adding further incentive to accept the deal. Prologis, based in California, has extended its “put up or shut up” deadline, originally set for 5pm UK time on Wednesday, by three weeks. The new deadline falls on 5pm on 12 August, giving the US firm additional time to finalize its acquisition plans. During morning trading in New York, Prologis’s shares dropped by as much as 3%, reflecting uncertainty among investors regarding the future of the deal. However, the shares later stabilized somewhat, indicating some level of confidence in the potential transaction. One of the key factors influencing this change in direction was the intervention of Norway’s Norges Bank Investment Management, one of Segro’s major shareholders. With holdings of 1.3% in Prologis and 8.3% in Segro as of June, Norges Bank urged both parties to explore a merger, emphasizing the strategic benefits of combining the two firms. The bank reportedly supported the idea of a combined entity capable of capitalizing on the growing demand for datacentre space driven by advancements in artificial intelligence. Segro, originally founded as the Slough Trading Company in 1920, has evolved significantly over the decades. Starting as a military repair depot, it transformed into one of the earliest examples of a modern industrial estate. Today, the company operates 10.9 million square meters of space across Europe, with its Slough trading estate housing the second-largest portfolio of datacentres globally. This expansion aligns with broader trends in the real estate sector, particularly the surge in demand for infrastructure supporting AI and cloud computing technologies. Both Segro and Prologis have been actively expanding their datacentre portfolios, recognizing the critical role these facilities play in the digital economy. Their respective tenant bases include major players such as Amazon, FedEx, and UPS, underscoring the strategic importance of their operations. The proposed takeover would create a formidable player in the global logistics and real estate markets, potentially reshaping the competitive landscape. As the UK continues to see a wave of foreign acquisitions, Segro’s situation reflects broader dynamics in the financial markets. Recent deals, including the £10.6bn purchase of Intertek by a Swedish private equity firm and the potential £5.7bn offer for easyJet, highlight the increasing appetite for British assets amidst geopolitical tensions and shifting investment priorities. The outcome of Segro’s takeover will likely influence future corporate strategies and market trends in the coming months.