FTSE 100 Segro ‘minded to accept’ £14bn Prologis takeover
Segro has said it is “minded to accept” the £14bn takeover offer tabled by US real estate giant Prologis.
The FTSE 100 property firm said on Wednesday evening that the terms of Prologis’s fourth bid are at a level it would be willing to recommend to its shareholders.
Segro’s update came just five minutes before the deadline at which Prologis would have had to walk away from a deal. The two firms have now agreed to push back the cut-off point until 12 August, meaning Prologis has until then to submit a binding offer.
The deal would exchange 0.0920 new Prologis shares for every Segro share, plus £3.5bn cash. The £10.54-per-share bid values the firm at £14bn.
The offer comes at a 42 per cent premium on Segro’s share price at the time Prologis tabled its first bid. This is the largest takeover premium notched by a real estate firm in the last decade.
A spokesperson for Prologis said: “Prologis’s 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.”
Prologis to list in London
This development appears to mark the end of a long-running tussle between the two real estate firms, who both traded strongly-worded barbs in an attempt to win over shareholders.
In total, Wednesday’s deal was 129p, or 14 per cent, higher than the initial £12.6bn offer tabled by Prologis at the end of June.
Prologis has committed to setting up a secondary listing on the London Stock Exchange once the deal is completed, saving the UK’s capital markets from another high-profile loss.
The London Stock Exchange has suffered a string of private takeovers in recent weeks.
Most recently, facilities management firm Mitie was swept off the London Stock Exchange for £3.1bn, marking the 11th takeover worth more than £1bn to be announced this year.
Tabling its latest bid on Wednesday morning, Prologis said this offer was its “best and final” approach for Segro.
Dan Letter, the chief executive of Prologis, had said: “There is no doubt a combination of both companies would deliver meaningful value.
“We have listened to feedback from shareholders and this morning, we have improved our proposal to make a compelling offer to the SEGRO Board. We run Prologis with discipline and this is our best and final offer.”
Norges called on Segro to engage
Some of Segro’s most high-profile investors had ramped up calls on it to engage with Prologis in recent days.
On Tuesday, Norges Bank – which owns 8.3 per cent of Segro and 1.3 per cent of Prologis – urged the two real estate firms to enter talks.
“We believe the proposal merits consideration, and we encourage the boards of both Segro and Prologis to enter into constructive discussions,” the $2.3 trillion fund said.
Prologis operates two joint ventures with Norges. Prologis European Logistics Partners was worth €2.4bn when it was set up in 2013, and Prologis US Logistics Venture was founded in the same year with an initial $1bn footprint.
On Wednesday, APG Asset Management – which holds 2.3 per cent of Prologis and 5.1 per cent of Segro – called on the two parties to engage in “constructive and meaningful dialogue”.
New York-listed Prologis, which manages some $98bn in assets, is based in San Francisco and operates more than 15,000 acres of land across 6,000 buildings worldwide.
Segro shares rose nearly four per cent on Wednesday. The group announced that it is minded to accept Prologis’s takeover after market close.
The stock’s value had nearly halved in the last five years but has soared in recent weeks following Prologis’s interest.