Segro Chairman Vows to Fight 'Cheap' $12.6 Billion Takeover Bid from Prologis
The British REIT's chairman calls the offer from the U.S. logistics giant 'inadequate' and 'opportunistic' as it aims to fend off a potential acquisition.
The chairman of Segro has vowed to resist a $12.6 billion (£12.6 billion) takeover bid from U.S. rival Prologis, describing the offer as "inadequate" and "opportunistic." Andy Harrison, chairman of the British warehouse and data center group, accused Prologis of attempting to acquire the FTSE 100 company "on the cheap."
Prologis, the world's largest logistics real estate investment trust (REIT) based in San Francisco, publicly released a presentation for investors detailing the "strategic and financial rationale" for the proposed deal. The U.S. firm stated that its offer of 925 pence per share presented "compelling value" to Segro shareholders and suggested its financial strength would stimulate a development surge.
However, Segro, the UK's largest REIT, has strongly refuted these claims, asserting that its funding is not a barrier to developing new facilities. The company plans to present its case to shareholders next week.
City analysts have indicated that Prologis would likely need to increase its offer by approximately $5 billion (£5 billion) to more than $17.5 billion (£17.5 billion) to successfully acquire the FTSE 100 business. Panmure Liberum has set a target price for Segro of 1300 pence, which would value the company at over $17.5 billion.
Analysts at Peel Hunt, Matthew Saperia and James Carswell, noted in a research report titled "Don’t let them steal our crown jewels," that "any offer for the UK’s largest REIT should adequately reflect the inherent value of the portfolio and its future growth prospects. The possible offer from Prologis, in our view, falls well short."
Segro is the latest in a series of FTSE 100 companies targeted by foreign suitors this year. Previous bids have been made for City institution Schroders, Lloyd's of London insurer Beazley, and laboratory testing group Intertek. Energy group DCC has also indicated it is "minded" to accept a $5.7 billion bid from private equity firm KKR, amidst broader concerns that Britain has become a "hunting ground" for overseas buyers.
If the acquisition of Segro were to succeed, it would mark the fifth FTSE 100 firm to be acquired by foreign entities in the current year. Harrison attributed the current dislocation in Segro's share price, in part, to the Middle East conflict, arguing that the Prologis offer does not reflect the company's intrinsic quality, scarcity, and growth potential.