The board of the UK warehouse landlord Segro has U-turned and said it would be willing to accept a £14bn takeover by its bigger US rival, Prologis, in what would be one of the largest foreign takeovers of a UK-listed company. The announcement, made after the stock market closed on Wednesday, came just hours before a “put up or shut up” deadline under the UK’s takeover code – and delivered the latest blow to the troubled London stock market.
Segro said in a statement that its board had “unanimously concluded” it would recommend its shareholders accept what Prologis called its “best and final offer”. The revised proposal values Segro at £10.32 per share, representing 3.9% more than its previous proposal and a 9.5% increase above its initial approach disclosed in June. Under the terms, Segro shareholders would receive 0.092 new Prologis shares for each Segro share, and would also be entitled to receive a permitted dividend. The UK company has asked Prologis to commit to establishing a secondary listing for Segro on the London Stock Exchange.
“Segro board unanimously recommends accepting Prologis's £14bn takeover bid, marking one of largest foreign takeovers of a UK-listed company.”
The about-turn came nearly a month after the board of the FTSE 100 company – which builds and rents out enormous warehouses to companies such as Amazon and Netflix – rejected an initial £12.6bn approach from Prologis and two subsequent offers. It also followed pressure from one of Segro’s major investors, Norway’s Norges Bank Investment Management, which held an 8.3% stake in Segro and a 1.3% stake in Prologis at the end of June. Norges said it understood “the strategic rationale for a combination” and had urged the UK company to engage with the US suitor.
Prologis, based in California, now has until 5pm on 12 August to make a firm offer to buy Segro. The US firm welcomed the additional time and said it was willing to work with the Segro board to reach an outcome. Its shares fell by as much as 3% during morning trading in New York, before recovering slightly.
Segro – an acronym for Slough Estates Group, after the town on the western fringes of London where it began life as the Slough Trading Company in 1920 – now owns 10.9m sq m of space across Europe. The deal, if completed, would mark one of the largest foreign takeovers of a UK-listed company and further dent confidence in London’s equity markets, which have seen a wave of companies moving abroad or being snapped up by overseas buyers.