Prologis has intensified its pursuit of Segro after the London-based logistics warehouse operator rejected a £12.6 billion ($16.6 billion) takeover bid last week, according to FreightWaves. The San Francisco-based real estate investment trust on Tuesday further outlined its financial and strategic thesis for the combination, which it said would unlock significant value for Segro shareholders beyond the initial 25% premium to share price.
Prologis's Strategic Rationale
Prologis (NYSE: PLD) proposed an all-stock transaction in which Segro shareholders would receive 0.084 new Prologis shares for each Segro share held, holding approximately 10.5% of Prologis’ share capital after closing, FreightWaves reported. The company said the deal provides Segro access to its larger logistics real estate network and its “fortress balance sheet.”
Prologis argued that Segro trades at a discount due to "lagging earnings and dividend growth" and its reliance on dilutive equity issuances to raise funds. In a news release cited by FreightWaves, Prologis said:
“Prologis’ access to public and private capital that will enable Prologis to unlock and accelerate the embedded value of SEGRO’s development and data center pipeline which Prologis believes SEGRO is unable to fully realize on a standalone basis given its balance sheet capacity and persistent trading discount.”
Prologis also highlighted that Segro has seen total shareholder returns decline by 20.1% over the past five years, while Prologis generated a 38.6% return, according to FreightWaves.
The combination would increase scale across the U.K. and Europe, more than tripling Segro’s European footprint to 363 million square feet, and giving it a nearly 3,000-acre land bank for future development projects. Prologis also touted its dedicated data center and energy teams, which it said will allow Segro to better monetize its existing data center pipeline.
| Metric | Prologis (5-year TSR) | Segro (5-year TSR) |
|---|---|---|
| Total Shareholder Return | +38.6% | -20.1% |
Segro's Rebuttal
Segro continued to push back on the transaction on Tuesday, claiming the offer was “inadequate, opportunistic and one-sided,” FreightWaves reported. Andy Harrison, chairman of Segro, said:
“Prologis is trying to acquire SEGRO on the cheap when our share price has been dislocated by the Middle East conflict and at a price that reflects none of the quality, scarcity and growth embedded in the business. We have unanimously rejected their Proposal because we continue to believe our compelling standalone investment case can deliver superior shareholder value. Capital is not a constraint on our ability to unlock all of this value for our shareholders.”
Market Reaction
Shares of Prologis were down 2.2% at 10:24 a.m. EDT on Tuesday, while shares of Segro were up 7.8%, according to FreightWaves.
Deal Context
The deal would mark Prologis’ biggest transaction since it acquired Duke Realty for $26 billion in 2022, FreightWaves reported. The bid represents a significant premium, but Segro’s board has unanimously rejected it, arguing that the standalone strategy offers superior value. As of Tuesday's trading, investor sentiment appeared split, with Segro shares gaining on the bid premium while Prologis shares dipped on the potential dilution and execution risk.
