East Mids Gateway developer SEGRO fends off £12bn takeover approach

Prologis has gone public with its bid to acquire the London-based REIT, which ‘unanimously and unequivocally’ rejected an all-share offer earlier this month.

In an update issued via the London Stock Exchange this morning, Prologis said it had written to the SEGRO’s board on 16 June to set out the terms of an indicative all-share proposal to acquire the company, which it valued at £12.6bn.

The offer valued SEGRO’s stocks at 925p, a 24.6% premium on the firm’s share price of 742 pence, at the close of trading yesterday.

SEGRO’s portfolio comprises around 117m sq ft of industrial, logistics and data centre space, reportedly valued at around £22bn.

The developer is waiting for MCHLG to complete the examination phase of a development consent order for a phase two extension to the East Midlands Gateway near Kegworth, spanning 3.2m sq ft of industrial logistics space, and set to form part of the East Midlands Freeport enterprise zone.

Prologis has plans of its own for a portion of the site, and submitted a joint application with East Midlands Airport owners MAG in 2024, to which SEGRO lodged an objection on the grounds that it was a “piecemeal” scheme, which was incompatible with the wider freeport development.

As part of an appeal to SEGRO shareholders to back a proposed deal, Prologis said its access to public equity, debt and private capital would unlock “embedded opportunities for investment”.

“Prologis urges SEGRO shareholders to encourage the SEGRO board to engage with Prologis to allow a binding offer to be put to SEGRO shareholders for their consideration,” said the update to LSE.

“SEGRO shareholders would receive shares in the world’s largest logistics REIT with a $140.9 billion market capitalisation, unlocking, on closing, significant upside to the current share price.

“Prologis believes that its global platform, balance sheet strength and diversified capital base can unlock the significant embedded value of SEGRO’s development and data centre pipeline.”

However, the offer was rejected yesterday, after SEGRO said the proposal fell short of its own valuation.

In a statement, the firm described Prologis’ bid as opportunistic, and timed to take advantage of a “clear dislocation” between the current share price and underlying value, which it said had been affected by geopolitical issues impacting trading valuations across the UK and European real estate sectors relative to the US REIT sector.

“SEGRO has a clear strategy, supported by a strong balance sheet and a proven operating platform,” said a spokesperson.

“Momentum is building in SEGRO’s occupational markets and the company has a large and attractive development pipeline, including an exceptional data centre platform, as well as a long track record of delivery.

“Accordingly, the board remains very confident in SEGRO’s ability to capture substantial value for its shareholders during the coming years.”

As per UK stock market rules, the firm now has until 22 July to table a formal offer for SEGRO, or must walk away for six months.