Segro backs £14bn Prologis bid in London market blow

The board of Segro has abandoned its resistance and agreed to recommend a £14bn takeover by California-based Prologis. The FTSE 100 company stated its directors had “unanimously concluded” to accept what Prologis termed its “best and final offer”. The reversal came just hours before a regulatory deadline that would have forced the American suitor to walk away.

Under the revised terms, Prologis is offering 0.092 of its own shares for each Segro share, valuing the UK group at £10.32 per share. This represents a 3.9% premium over Prologis’s previous proposal and a 9.5% increase on its initial approach in June. Segro shareholders will also receive a permitted dividend, and the UK board has asked Prologis to maintain a secondary listing on the London Stock Exchange.

Segro’s change of heart followed direct pressure from one of its largest backers. Norway’s Norges Bank Investment Management, which holds an 8.3% stake in Segro, publicly urged the company to engage, stating it understood “the strategic rationale for a combination”. Until that point, Segro had dismissed multiple overtures dating back to March, with chief executive David Sleath previously labelling the initial bid as “opportunistically timed”.

For European investors, the deal underscores a widening valuation gap between US and UK equities that is triggering an exodus of major listed companies. British stocks have become particularly cheap relative to their American peers, a disparity exacerbated recently by geopolitical tensions stemming from the Iran conflict. Segro’s shares had fallen roughly 40% from their 2022 peak before the initial bid surfaced.

The takeover is also a barometer of how the artificial intelligence boom is reshaping European commercial real estate. Segro owns 10.9 million square metres of space across Europe, including a trading estate in Slough that houses the world’s second-largest portfolio of datacentres. Both Segro and Prologis have been pivoting their portfolios from traditional pandemic-era logistics facilities toward building infrastructure to service the AI industry.

The market reaction in New York was cautious, with Prologis shares dropping as much as 3% before recovering slightly. The UK Takeover Panel has granted a three-week extension, pushing the deadline for a firm offer to 5pm on 12 August. Prologis said it welcomed the extra time to finalize the acquisition of a company that began life a century ago as a military repair depot.

Segro is the latest in a string of high-profile British targets. Laboratory testing firm Intertek recently accepted a £10.6bn approach from a Swedish private equity group, while easyJet has approved a potential £5.7bn bid from US firm Apollo. Together, these deals highlight a fundamental reshaping of corporate ownership in Europe, driven by American capital pursuing assets it views as undervalued.