U.S. logistics property group Prologis (NYSE:PLD) has publicly disclosed its £12.6 billion ($16.62 billion) takeover proposal for Segro (LSE:SGRO) after the UK warehouse owner rejected the approach, escalating pressure on the company’s board to enter formal discussions.
The move represents the latest attempt by an overseas buyer to acquire a London-listed business, as lower UK market valuations continue to attract international interest and contribute to a record year for takeover activity in Britain.
The announcement follows a similar strategy adopted by Castlelake, which recently made its approach for easyJet public after multiple unsuccessful attempts to engage with the airline’s board.
Prologis Appeals Directly to Segro Shareholders
Prologis argues that Segro’s shares have consistently traded below the company’s net asset value and that the business faces limitations in extracting the full value from its development projects and growing data centre pipeline, an area benefiting from rising artificial intelligence demand.
“Prologis urges Segro shareholders to encourage the Segro board to engage with Prologis to allow a binding offer to be put to Segro shareholders for their consideration,” the company said in a statement outlining its all-share proposal.
The disclosure prompted a sharp market reaction, with Segro shares jumping more than 20% to 892 pence, their highest level since September 2024.
Segro Rejects Offer as Undervalued
Segro responded by reaffirming its opposition to the proposal.
The company stated that its board had “unanimously and unequivocally rejected the proposal, which falls a long way short of Segro’s own views on value”.
Management also described the approach as “opportunistically timed”, suggesting the offer failed to reflect the company’s long-term prospects.
Offer Values Segro at Book Value
Under the terms of the proposal, Segro shareholders would receive 0.084 new Prologis shares for every Segro share held.
Based on prevailing market prices, the offer values Segro at approximately 925 pence per share, representing a premium of around 25% to Tuesday’s closing price.
However, the valuation broadly matches Segro’s most recently reported net asset value, offering little premium to book value.
The proposal contrasts with several recent UK property transactions. Blackstone’s acquisition of Warehouse REIT was completed at a discount to book value, while the merger between Primary Health Properties and Assura was agreed at only a modest premium.
“In our view Prologis would be reluctant to increase the offer materially and take it above NAV,” said Oli Creasey, head of property research at Quilter Cheviot.
Analysts Question Whether Bid Reflects Future Growth Potential
Industry observers note that Segro and Prologis already have significant overlap across key European logistics markets, including the UK, France and Germany.
Panmure Liberum analyst Bjorn Zietsman questioned whether the current proposal “adequately compensates shareholders” for Segro’s future earnings potential, expected returns and broader asset portfolio.
The analyst suggested investors may seek a higher valuation given the company’s development opportunities and exposure to expanding data centre demand.
Prologis Has History of Value-Creating Acquisitions
Prologis has built a strong reputation for acquiring logistics-focused real estate investment trusts and generating substantial returns from those transactions.
The company has previously delivered returns of approximately 39% from Duke Realty, 97% from Liberty Property Trust and 166% from DCT Industrial following the announcement of those acquisitions.
Under UK takeover regulations, Prologis must either submit a formal offer for Segro or withdraw its interest by July 22.
The coming weeks are likely to determine whether shareholder pressure leads to negotiations or whether Segro continues to resist the approach.