Segro's board has said it is minded to recommend US listed giant Prologis's "best and final" £14 billion takeover bid opening the door to what will be one of the largest real estate transactions in the UK.
In a stock market announcement, two minutes ahead of the deadline for the London Stock Exchange to extend the "put up or shut up" period for the landmark offer, Segro's board said it had carefully reviewed today's fourth proposal with its advisers and Prologis.
The board of Segro said it has "unanimously concluded that the financial terms" are at a level that it would be minded to recommend to its shareholders. Segro said it has also requested, and the takeover panel has agreed, to an extension to the date by which Prologis is required either to announce a firm intention to make an offer or to announce it is walking away.
Prologis subsequently responded: "Prologis' 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."
This morning Prologis, the US's largest listed industrial investor and developer, said it had made a fourth takeover approach to industrial investor and developer Segro, the UK's largest REIT, upping the tabled proposal to £14 billion from a prior bid valuing Segro at £13.5 billion.
There have been two weeks of counter-offers since Prologis first made public its takeover bid and Segro robustly dismissed it as undervaluing its business and unfairly taking advantage of the effect of global geopolitical events on European real estate share prices. It had termed Prologis's offer "opportunistic, one-sided and inadequate", providing a defence that values its business at 1312p per share.
The latest improved proposal from Prologis comprises 920 new Prologis shares for each Segro share, a 9.5% increase over its initial proposal two weeks ago, and includes a partial cash alternative of up to £3.5 billion, an increase from the previous offer which enables shareholders to cash out.
That values each Segro share at 1031.7 pence, or a 14% premium to Segro's net asset value at the time its first offer became public on 30 June 2026. Including a proposed dividend for Segro shareholders it equates to a 16% premium to net asset value, or 1050p per share.
Existing Segro shareholders would hold about 8.9% of Prologis' issued share capital. Segro said that, following the discussions today, Prologis will also commit contractually to Segro to establish a secondary listing of Prologis shares on the London Stock Exchange, a sweetener for investors concerned about one of Europe's leading REITs no longer having a European listing.
Two of Segro's largest shareholders – Norges Bank Investment Management, which holds 1.3% of Prologis and 8.3% of Segro, and APG Asset Management, which holds 5.1% of Segro and 2.3% of Prologis – have also this week weighed in to suggest the tie-up makes sense and should be considered.
Segro and Prologis – a tale of two industrial titans
Segro begun life as the owner of the Slough Trading Estate, which was opened in 1920 and was one of the first business parks in the UK. For much of its life it was known as Slough Estates.
The park covers 486 acres and comprises 7.5 million square feet of mostly industrial space across more than 600 buildings. The estate has also become embedded in UK popular culture as both the home of David Brent's Wernham Hogg Paper Merchants in comedy series The Office and the inspiration behind poet John Betjeman's "Slough", his famous poem criticising the over-development of rural England.
Segro's growth
A critical moment in its journey towards being the United Kingdom's largest REIT and one of the largest industrial developers across the UK and Europe was the 2009 acquisition of rival and peer Brixton Estates in a £107 million rescue deal. The group rebranded as Segro in 2007.
In recent years the warehouse developer has benefitted from the relentless increase in investor appetite for logistics, industrial and data centres as ecommerce has driven a massive increase in occupier demand.
The history of Prologis, the world’s biggest industrial developer, dates back to 1983 with the formation of AMB Property Corporation in the United States focusing on investment in office, industrial and community shopping centres on behalf of major institutional investors.
In 1991, Security Capital Industrial Trust was incorporated and by 1994 the company was listed on the New York Stock Exchange. It opened its first European office in Amsterdam in 1997 and changed its name to Prologis in 1998.
In 2011 Prologis and AMB merged to create a global industrial real estate giant with more than $40 billion of assets under management and a platform of logistics and distribution facilities on four continents. Among a number of subsequent takeovers, in 2020 Prologis completed an all-stock acquisition of Liberty Property Trust for $13 billion.
By April this year, the San Francisco-based firm announced it had signed 64 million square feet of warehouse leases, its highest for a first quarter, as revenue rose 7.5% to $2.3 billion from the year-earlier period. In the UK it has a 35.3 million-square-foot portfolio and 74 staff.
Prologis's move is the latest example of consolidation in real estate as a continued drag on share prices alongside a lack of distress at the asset level has encouraged listed and non-listed buyers to take advantage.
Recent take-privates in the UK have included Starwood Capital's £673.5 million acquisition of the Balanced Commercial Property Trust, the Goldentree-backed acquisition of Abrdn Property Income Trust and Apollo's refinancing of £610 million of public bonds secured against Canary Wharf's shopping centre. On the listed side, many big names have become part of bigger organisations, notably LondonMetric's takeover of LXi REIT, NewRiver's merger with Capital & Regional and Tritax Big Box REIT's mega tie up with UKCM.
The UK real estate market is beginning to digest a landmark transaction and its implications.
Speaking to CoStar News, Neil Seager, managing partner at Haslams Surveyors, said: "Prologis’ takeover of Segro shatters European records, both in terms of deal size and the valuation attached to a listed real estate company. It is a powerful statement from global capital about the strategic importance of modern logistics warehouses and data centre infrastructure. By pricing the transaction at such a premium, the deal effectively establishes a new benchmark, resetting expectations for corporate property valuations across the sector.
"Yet, alongside the excitement, there is also a sense of nostalgia. For many, the loss of Segro as an independent UK real estate champion marks the end of an era. Speaking personally, it is hard not to feel a tinge of sadness, particularly for those of us who remember the company’s roots as Slough Estates. While the logic of the transaction is compelling, the disappearance of such a long standing British property stalwart inevitably feels like the close of an important chapter in 'shed market' history."
Analysts at Peel Hunt noted that Segro accounts for around 25% of the European Public Real Estate Association UK index, the tracking of European publicly listed real estate companies, and is by far the largest UK REIT to be subject to M&A.
"This is also the fourth listed REIT to be consumed into a larger international REIT, and we wonder if we could see further such deals?"