For a few hours on Wednesday, it seemed possible that a rare stock market event was unfolding: a FTSE 100 company battling a hostile US raider and defying its own large shareholders to stay independent. It did not last. Minutes before a deadline, Segro – the warehouse landlord known for most of its corporate life as Slough Estates – capitulated. It said it was “minded to recommend” the “best and final” offer of £14bn, or £10.32 a share, from Prologis of San Francisco.
The two sides now have until 12 August to finalise a firm agreement. The deal will be the biggest Footsie takeover in a year already heavy with bids. In two ways, it is also the most depressing, according to the Guardian’s Nils Pratley.
“Segro, the FTSE 100 warehouse landlord, has agreed to a £14bn takeover by US giant Prologis, ending a hostile bid battle.”
First, because David Sleath, Segro’s long-serving chief executive, had put up a decent fight and had the better of the arguments. While most property transactions happen close to book value – 905p in this case – Sleath urged shareholders to be patient and focus on growth in AI datacentres and big-box warehouses for online retailers. Segro pointed to an estimate from CBRE, the commercial property firm, of a near-£18bn valuation, or £13 a share, within a few years, thanks to datacentre expansion.
Prologis countered that such valuations were unrealistic because Segro lacks the financial muscle to exploit the opportunities. Its pitch to shareholders was to take the money – or rather, to accept the terms of a share swap, since the cash element of the offer, injected late in the day, is only 25%. The 14% bid premium to the last asset valuation was enough to get some big Segro shareholders salivating. Led by Norway’s sovereign wealth fund, which holds an 8% stake, calls for “engagement” had grown louder in recent days.
The tale is wearyingly familiar. Even when boards are up for a scrap, the dead hand of institutional money intervenes. Most of the investors calling for a deal also had holdings in Prologis, which has a $135bn (£101bn) market capitalisation. For those with a foot in both camps, the quarrel over fair terms was almost a spreadsheet exercise in portfolio management. London loses again.