Shares in real estate investment trust SEGRO (LON:SGRO) leapt after it was revealed the board had rejected a £12.6 takeover bid. The approach came from US company Prologis (NYSE:PLD), which published the full terms of its proposal through the London Stock Exchange.
All-share offer
Prologis, the world’s largest industrial REIT with a market cap of $140 billion, proposed an all-share offer for SEGRO. Based on a share price of $145.30 and an exchange rate of $1.32, the offer valued SEGRO at £12.6 billion or 925p per share.
The valuation represents a near-25% premium to SEGRO’s last price and is equal to the firm’s NAV per share as of 31 December 2025. Under the terms of the offer, SEGRO shareholders would own around 10% of Prologis’s issued capital.
The US firm argues integrating SEGRO offers shareholders ‘accelerated growth’ compared to a standalone business. It also claims its balance sheet strength can ‘unlock the significant embedded value of SEGRO’s development and data center pipeline’.
By going public, Prologis is hoping shareholders will exert pressure on the SEGRO board to allow it to make a binding offer. For Stock Exchange purposes, the offer period started at 7am today and will run until 22 July.
SEGRO is a quality business with a highly predictable income stream, which is presumably why Prologis is interested. It may not grow earnings that quickly – we estimate a CAGR of around 6% – but it does it consistently.
Like all REITs, the company’s shares have been trading at a persistent discount to NAV. However, that shouldn’t bother shareholders because NAV doesn’t pay their dividends, cash flow and earnings do.
If Prologis wants to prise the business away, a cash and share offer pitched at around £10.25 would stand more chance of success. Otherwise, investors should sit tight and let the shares re-rate under their own steam.
We do wonder, though, whether SEGRO ought to look for a partner itself. Given today’s other surprise news of Schroder European Real Estate (LON:SERE) winding down, maybe there’s a conversation to be had?
Read the SEGRO press release here: https://www.segro.com/investors/regulatory-news
