SEGRO ready to accept £14 billion Prologis offer

The US-based real estate company Prologis has increased its bid for UK company SEGRO to £14 billion, with an offer described as: “Best and final”, which SEGRO’s board has now said it would be willing to accept.

The offer values the company at 1032p a share, coming just days after a bid offering 993p a share, which SEGRO rejected on their view that remaining as an independent company would provide superior returns for shareholders.

The offer before that, made last month, was also rejected by SEGRO, which valued the company at 925p a share.

This latest bid also has a £3.5bn cash alternative, in the scenario that this option is fully taken up SEGRO investors would then own approximately 9 per cent of Prologis, according to the Financial Times.

Yesterday was the deadline for Prologis to confirm intention for a firm offer or walk away from the potential acquisition; they have chosen to go ahead with the former, and SEGRO’s board has confirmed in a statement that they would be: “Minded to recommend” this offer.

Now that the intention has been confirmed, Prologis has an extended deadline, giving them until 5pm on 12 August to make the firm offer.

Comments

Neil Seager, managing partner at Haslams Surveyors – who has previously advised SEGRO on pre-letting matters in 2014 and 2016 – said:  “Prologis’ takeover of SEGRO shatters European records, both in terms of deal size and the valuation attached to a listed real estate company.

“It is a powerful statement from global capital about the strategic importance of modern logistics warehouses and data centre infrastructure. By pricing the transaction at such a premium, the deal effectively establishes a new benchmark, resetting expectations for corporate property valuations across the sector.

“Yet, alongside the excitement, there is also a sense of nostalgia. For many, the loss of SEGRO as an independent UK real estate champion marks the end of an era. Speaking personally, it is hard not to feel a tinge of sadness, particularly for those of us who remember the company’s roots as Slough Estates.

“While the logic of the transaction is compelling, the disappearance of such a long-standing British property stalwart inevitably feels like the close of an important chapter in “shed market” history.”

Nick Cripps, head of international capital markets at Panattoni, said: “The proposed takeover at a premium to net asset value confirms there is deep demand for well-located industrial and logistics space, and it is holding up right through the cycle.

“When such a well-informed global player is willing to pay a premium for UK and European exposure on this scale, it reinforces the view that international capital still considers this region as one of the most attractive places to invest in the asset class.

“We are seeing the lines between logistics, advanced manufacturing and data centres blurring, which is driving strong demand for modern, high-specification warehouse assets.”

Charles Ferguson-Davie, chief executive and chief investment officer of Moorfield, said:

“Prologis’ now recommended offer for SEGRO highlights the attraction to international investors of good quality, well managed, real estate in the UK and that listed UK real estate has been mispriced. Despite the shares having traded at a persistent discount, the intrinsic value was there all along.

“We have argued for a while that this is an attractive point in the cycle to put money into UK real estate, and a deal on this scale backs that up, even if it is a shame to see another UK company consumed. This transaction should give confidence to others about allocating capital to the UK.”