FTSE 100 property giant Segro has launched a strong rebuttal against a £12.6bn takeover proposal from its American competitor, Prologis. In a direct address to investors, the UK-based real estate investment trust (REIT) characterised Prologis's offer as "opportunistic, one-sided, and inadequate," following the US firm's suggestion last month to merge the two entities into a colossal investment trust.
Segro had initially rejected Prologis's 925p per share bid last month, an approach that nevertheless saw Segro's shares surge by nearly 18 per cent at the time. However, in a detailed presentation to shareholders on Wednesday, the FTSE 100 company systematically dismantled the takeover offer, accusing Prologis of substantially undervaluing its assets. Segro's Chief Executive, David Sleath, suggested that the US real estate firm's move was an attempt to capitalise on a dip in Segro's share price, which he attributed to the ongoing conflict in Iran. He also highlighted Segro's substantial investments in data centres in recent years, stating he was "not surprised" by Prologis's attempt to acquire this superior portfolio.
The UK firm further alleged that its US suitor's proposal would "materially dilute" its shareholders' stake in its existing property portfolio. According to Segro, the offer would compel its investors to exchange all their shares for a significantly smaller holding in Prologis's portfolio, which is described as having a different, more US-centric focus. Despite the takeover offer representing an approximate 25 per cent premium on Segro's closing share price at the time of the bid, the FTSE 100 firm contends it is on the cusp of realising substantial increases in its inherent value.
Segro recently adjusted its net asset value to 905p per share, down from 925p. However, the company projects a 103p per share boost from its £1.6bn industrial and logistics development pipeline, alongside an additional 139p per share gain stemming from its £2.5bn data centre pipeline. Mr. Sleath also criticised Prologis for not factoring in other benefits it would gain from the acquisition, such as reduced tax liabilities, asserting that Segro's shareholders should be compensated for these advantages.
A spokesperson for Prologis noted Segro's announcement, reiterating their belief that a combination with Prologis represents the optimal path to maximise long-term value for Segro shareholders and other stakeholders. They emphasised that unlocking the full potential of Segro's assets would require the capital, data centre expertise, customer relationships, and platform capabilities that Prologis can provide at scale. On Wednesday, Segro's shares experienced a slight dip of one per cent, settling at 868p, though they remain up 22 per cent year-to-date.