UK industrial property group Segro has recently turned down a third takeover proposal from its US competitor Prologis, with the latest offer valued at approximately 13.5 billion pounds.
Prologis disclosed this development on July 21, stating its third bid stood at 993 pence per share, a 6% increase over its initial proposal made last month, and comprising Prologis stock with a 20% cash component. Segro rejected this offer last Friday.
Segro Chairman Andy Harrison stated that the latest bid failed to reflect the "quality, scarcity, or long-term prospects" of the company's asset portfolio. According to Segro's statement issued on Monday, Prologis's third offer represented a premium of nearly 10% to Segro's net asset value and a 34% premium to its share price before takeover interest became public.
Prologis indicated that, as part of the proposed transaction, it would explore a secondary listing of its shares in London. If the acquisition were to proceed, it would become the largest deal of the year in the London market.
Segro believes the initial offer from Prologis undervalued the company and its growth prospects, citing a valuation from commercial real estate investment firm CBRE that placed its value at around 13 pounds per share. Prologis countered, describing Segro's proposed valuation as "unrealistic" and stating there was no "market evidence" to support Segro's share price reaching the 993 pence it had cited.
In its Monday statement, Segro noted that, prior to the formal offer deadline of July 22 stipulated by UK takeover rules, its management had met with Prologis executives to "understand Prologis's ability to improve the financial terms." Over the past month, Segro's share price has risen significantly, closing at 897 pence last Friday, while Prologis's stock gained about 4%, giving it a market capitalization of roughly $140 billion.
Prologis also revealed it had proposed an all-stock acquisition of Segro in March 2024, with an implied price of 963 pence per share, which Segro deemed "too speculative" at the time. Segro characterized Prologis's approach as "opportunistic," aiming to capitalize on a period when Segro's shares were undervalued, just as the company's market was turning a corner and its growth momentum was accelerating. In early Monday trading, Segro's shares were down slightly by 0.3% to 894.6 pence.
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