London-based logistics warehouse operator Segro's board has agreed to back an increased takeover bid from San Francisco-based real estate investment trust Prologis, valuing Segro at £14 billion ($18.7 billion), according to FreightWaves. The board's unanimous decision came hours after Prologis submitted its "best-and-final" offer on Wednesday.
Deal Terms
Prologis increased its offer by 9.5% over the initial June 24 proposal. Under the new terms:
| Component | Initial Offer | Increased Offer |
|---|---|---|
| Share consideration | 0.092 Prologis shares per Segro share | 0.092 Prologis shares per Segro share |
| Cash component | Up to 20% of consideration | Up to 25% of consideration (new) |
| Total equity value | Not disclosed | £14 billion ($18.7 billion) |
| Premium to 3-month VWAP | Not disclosed | 47% |
| Increase over initial | – | 9.5% |
The new bid gives Segro shareholders the option to elect up to 25% cash (previously capped at 20%), according to FreightWaves.
Board Recommendation
Segro’s board unanimously agreed to recommend the fourth proposal if Prologis formalises it under Rule 2.7 of the UK Takeover Code. In a statement, the Segro board said:
The Board of SEGRO has unanimously concluded that the financial terms of the Fourth Proposal are at a level that it would be minded to recommend to SEGRO shareholders should a firm intention to make an offer pursuant to Rule 2.7 of the Code be announced by Prologis on such financial terms.
Regulatory Timeline
The UK Takeover Panel extended the deadline originally set for Wednesday at 5:00 p.m. London time. Prologis now has until August 12 to finalise its intentions, according to FreightWaves.
Market Reaction
Segro shares closed up 2.9% on the London Stock Exchange on Wednesday. The stock has risen 21% since Prologis’ first takeover bid. Meanwhile, Prologis shares (NYSE: PLD) were down 3.1% at 1:31 p.m. EDT, compared to the S&P 500, which was up 0.1%.
Strategic Rationale
Throughout the one-sided courtship, Prologis maintained that the business combination would provide Segro with access to a much larger logistics real estate portfolio and a significantly lower cost of capital. Prologis also stated that Segro trades at a discount because it is required to make dilutive equity issuances to fund new projects. It suggested that some of Segro’s development pipeline — which supports its equity valuation — is at risk due to potential funding challenges.
A statement from Prologis said:
Prologis’ goal has always been a constructive process. The proposed combination represents a compelling opportunity for shareholders of both companies. Prologis welcomes the additional time afforded by the extension and is ready to work with the SEGRO Board in reaching an outcome that delivers value for all stakeholders.
Why It Matters
This deal highlights how logistics real estate is becoming an increasingly strategic and consolidated asset class, according to FreightWaves. The combination of two major industrial warehouse operators would create a global logistics property giant.
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