Prologis agrees £14.3bn takeover of UK warehouse group Segro

U.S logistics giant Prologis has agreed a £14.3 billion takeover of British warehouse group Segro in one of the biggest foreign acquisitions of a UK-listed company

U .S logistics property giant Prologis has agreed to buy British warehouse landlord Segro in a deal worth up to £14.3 billion.

The takeover follows weeks of resistance from Segro and pressure from major shareholders, with the London-listed company having rejected three earlier approaches before backing Prologis’s improved offer. 

Under the recommended deal announced through the London Stock Exchange, Segro investors will receive 0.0920 new Prologis shares for each Segro share, alongside a partial cash alternative of up to £3.5 billion and the prospect of a final dividend.

The terms value Segro at up to £10.54 a share – a 42 per cent premium to its closing share price on June 23, the day before Prologis’s interest became public. 

Segro shareholders would own around 8.9 per cent of Prologis following completion of the deal, assuming the cash alternative is fully taken up.

Prologis has also committed to exploring a secondary London listing for the enlarged business, providing a potential route for Segro investors who want continued access to shares traded in the UK.

The takeover will combine two of the world’s largest owners of logistics property at a time when demand for warehouses, distribution hubs and data centres is being reshaped by ecommerce and the rapid expansion of artificial intelligence infrastructure.

Segro owns around 10.9 million square metres of warehouse and industrial space across Europe, while Prologis counts companies including Amazon, FedEx and UPS among its customers. 

The two groups have also been expanding their data-centre pipelines as demand for computing capacity grows. 

“Prologis and Segro believe that the combination offers a compelling opportunity to Segro shareholders,” the companies said in their joint announcement, according to Reuters. 

Their combined market capitalisation stood at more than US$152 billion before the deal was announced.

The agreement represents a major reversal for Segro, whose board had repeatedly resisted Prologis’s attempts to acquire the company.

Prologis initially approached Segro with a proposal valuing the British group at around £12.6 billion before raising its terms several times.

On July 22, it tabled what it called its “best and final” proposal, valuing Segro’s issued and to-be-issued share capital at around £14 billion and increasing the proportion available in cash.

The July proposal offered 0.0920 Prologis shares for each Segro share and up to £3.5 billion in cash, with Prologis chief executive Dan Letter arguing that the combination would create value for both groups.

Segro’s stance changed after major investors urged the two companies to continue negotiations.

APG Asset Management, Norges Bank Investment Management and CCLA Investment Management were among shareholders that had called for talks, arguing that a combination of the companies could create value. 

The transaction will rank among the largest overseas takeovers of a UK-listed company and comes during an exceptionally busy year for mergers and acquisitions involving British businesses.

LSEG data cited by Reuters puts it among the biggest foreign acquisitions of a UK-listed company on record and the second-largest UK M&A deal announced this year, behind the US$65 billion merger involving Unilever’s food business. 

Segro shares rose by just under 1 per cent to £9.69 in early London trading following the announcement, remaining below the maximum value implied by the offer. Prologis shares were down 1.5 per cent in pre-market trading in the United States. 

The deal remains subject to the usual shareholder, regulatory and completion conditions set out in the companies’ formal takeover documentation.

READ MORE: New York named world’s most attractive city for tourists. Paris takes second place and London sixth as global study measures which destinations travellers notice, enjoy and recommend.

Do you have news to share or expertise to contribute? The European welcomes insights from business leaders and sector specialists. Get in touch with our editorial team to find out more.

_{Main Image: Handi Boyz LLC/Pexels}