FTSE 100 property company Segro has accepted a £14bn takeover bid from US-based Prologis, concluding a protracted battle between the two real estate heavyweights and delivering another blow to the London Stock Exchange.
Prologis announced on Tuesday that it has secured an agreement with Segro's board which places a £14.3bn valuation on the British business. The acquisition is expected to complete during the first half of next year, with Segro shareholders set to receive 0.92 Prologis shares for each Segro share, alongside a partial cash option totalling £3.5bn.
Another high-profile exit from London
The transaction marks the latest prominent departure from the London Stock Exchange, with 11 companies valued above £1bn now having exited the market through takeovers this year. This trend has raised concerns about the attractiveness of London as a listing venue.
Daniel Letter, chief executive of Prologis, said: "This deal brings together Segro's exceptional portfolio and customer relationships with Prologis' global platform, operating expertise and financial strength. We look forward to building on the strengths of both companies and creating even greater value for our customers and shareholders."
Leadership perspectives
David Sleath, Segro's chief executive, expressed confidence in the deal: "Prologis shares our conviction in the long-term structural drivers underpinning demand for modern logistics and data centre infrastructure. We believe the combination would bring together two highly complementary businesses and create a compelling platform."
The two property giants had traded criticisms for weeks prior to Prologis' final bid, as they clashed over the valuation of their respective data centre portfolios. Prologis had argued that Segro's assessment was "unrealistic" because the FTSE 100 company downplayed the risks associated with its "speculative, long-dated, often un-zoned and untenanted development projects".
Background to the deal
Last month, Sleath condemned what he described as an "opportunistic, one-sided and inadequate" Prologis proposal worth £12.6bn. After critical discussions on the Sunday before Prologis submitted its final bid, Segro criticised the American company's leadership for failing to table an improved proposal during those negotiations.
Prologis responded, insisting that the meeting was intended "not to present a further revised offer, but rather to understand whether there was a credible path to a transaction".
Details of the offer
The American property firm announced on Tuesday that Segro shareholders will be entitled to receive the British company's interim dividend of 10.14p per share, alongside the final dividend due to be announced in March. Prologis stated the final agreed proposal represents a 39 per cent premium to Segro's share price on the day it launched its initial takeover approach.
Segro's share price rose one per cent to 969p in early trading.
Segro's UK developments
Segro's UK developments include Segro Logistics Park East Midlands Gateway. Its first phase includes 4.5m sq ft of logistics space, while Segro is also planning a second phase with 326,500 square metres of 'state-of-the-art' employment space that could create 5,000 jobs. Segro is also developing the 2.1m sq ft Segro Park Coventry.
