Segro board U-turns on £14bn takeover bid by US rival Prologis | Business

The board of UK warehouse landlord Segro has made a U-turn and said it would be willing to accept a £14bn takeover of Segro’s biggest US rival Prologis in a deal that would be one of the biggest foreign takeovers of a UK-listed company.

In the latest blow to the troubled London stock exchange, Segro said the board had “unanimously agreed” that it would recommend its shareholders to accept what it called Prologis’ “best and final offer” made just hours before the deadline.

The announcement, made after the stock market closed on Wednesday afternoon, came nearly a month after the board of the FTSE 100 company, which builds and leases huge warehouses to companies such as Amazon and Netflix, rejected Prologis’ initial £12.6bn bid and two subsequent bids.

Prologis’ revised bid offered 0.092 new shares for every Segro share, valuing the UK company at £10.32 per share. This represents 3.9% more than its previous proposal and a 9.5% increase over the initial approach announced in June.

Under the terms of the deal, Segro shareholders will also be entitled to a permissible dividend, while the company has also asked Prologis to commit to a secondary listing for Segro on the London Stock Exchange.

Prologis had until 5pm UK time on Wednesday to announce its firm intention to make an offer or leave, known as the “stand down or shut up” (AMBUSH) deadline under the UK’s takeover law.

That deadline has been extended by three weeks, and California-based Prologis has until 17:00 on August 12 to submit a definitive offer.

Prologis said it welcomes the additional time and is willing to work with the Segro board to achieve an outcome. Its shares fell as much as 3 percent in morning trading in New York before recovering slightly.

Segro’s return came just hours after one of its major investors, Norway’s Norges Bank Investment Management, called on the British company to cooperate with Prologis.

Norges, which held a 1.3% stake in Prologis and an 8.3% stake in Segro at the end of June, said he understood “the strategic logic of a merger.”

Segro represents the Slough Estates Group, named after the town in London’s west end where it started life as the Slough Trading Company in 1920 when a military repair depot was converted into a garage. the first example of a modern industrial area.

Segro currently has 10.9 million square meters of space across Europe, and its tenants have changed over time. The company says its Slough business area is now home to the second largest data center portfolio in the world.

Segro and Prologis, which count Amazon, FedEx and UPS as customers, are building data centers to take advantage of the emerging artificial intelligence industry.

Segro’s business has taken off and its shares have soared during the Covid pandemic, which has seen consumers confined to their homes, creating huge demand for deliveries and putting pressure on warehouse space.

But its shares began falling in the spring of 2022 and were trading about 40% lower than their peak before news of Prologis’ initial offering was announced in June.

Segro had previously turned down Prologis’ offers up to March 2024, describing the company’s initial offer as “opportunistically timed”, while long-serving CEO David Sleath insisted it could offer “strong prospects” to shareholders through the development pipeline.

Prologis’ last offer to Segro, Intensity in foreign tenders For British companies, this has brought a rush to make deals.

British shares have become cheaper than their US counterparts after laboratory testing company Intertek, one of the last companies on the FTSE 100, backed a £10.6bn approach from a private equity firm owned by the Swedish billionaire Wallenberg family.

The board of low-cost airline easyJet has given the green light to a possible £5.7bn bid from US private equity firm Apollo, but potential EU scrutiny of airline ownership has cast a question mark over the deal.