SEGRO, a UK warehouse landlord, has rejected a $17.1 billion (£13.5 billion) takeover proposal from its US rival, Prologis, marking the third such rejection. The latest offer, submitted on July 16 and rejected by SEGRO's board on July 17, valued SEGRO at 993p per share. This represents a 9.7% premium to SEGRO's pro forma adjusted Net Asset Value (NAV) at June 30 and a 33.8% premium to its share price on June 23.
The revised terms included a partial cash alternative of up to $3.4 billion (£2.7 billion), which is approximately 20% of the total consideration. Shareholders opting for the full basic cash entitlement would receive 200p in cash and 0.0712 new Prologis shares per SEGRO share. Existing SEGRO shareholders would own around 9.2% of the enlarged Prologis if the cash option is fully taken up.
SEGRO's board unanimously rejected the proposal, stating it failed to recognize the "quality, scarcity or long-term prospects" of its portfolio and platform, and that its standalone strategy offered superior value. Prologis, however, criticized SEGRO's defense, calling its assumptions for future development and earnings "unrealistic." Prologis argued that even with SEGRO’s projected earnings of 50p per share in 2030, and based on its undisturbed share price to earnings multiple of 19.3 times, the implied undiscounted share price for SEGRO in four years would be 964p, which is below Prologis's current offer. The UK Takeover Panel has set a deadline for Prologis to make a firm offer or withdraw by July 22, unless an extension is granted.
Analysts like Richard Williams and Matthew Read from QuotedData supported SEGRO's board, suggesting that the bid is opportunistic and undervalues SEGRO's potential upside. They believe SEGRO's board is right to push for a higher price that more fairly reflects the quality of its existing portfolio and future growth. Prologis, on the other hand, believes a combination would create substantial long-term value and that its proposal offers shareholders greater certainty of value compared to SEGRO's standalone strategy. SEGRO’s shares were down 1.8% to 884.40p in London following the news, while Prologis closed down 1.5% at $147.48 in New York.
