The £14 billion takeover of FTSE 100 property giant Segro by US firm Prologis has sent shockwaves through the London Stock Exchange, marking the largest acquisition of a Footsie company this year. The deal values Segro at £10.32 per share and highlights concerns about the dwindling number of major firms listed on the LSE.
Segro, with its long-serving chief executive David Sleath at the helm, is a significant player in the logistics and data centre property market. Its unique portfolio, focused on Europe's supply-constrained markets, offers substantial growth opportunities, particularly from the expansion of AI data centres and big-box warehouses for online retailers. According to commercial property investment firm CBRE, Segro's standalone valuation could reach nearly £18 billion, or £13 per share, within a few years.
However, Prologis countered that Segro lacked the financial capacity to fully capitalise on these opportunities. Their 'best and final' offer included a 14% premium on Segro's last asset valuation, which proved persuasive to several large shareholders, including Norway's sovereign wealth fund with its 8% stake in Segro. The cash component of the offer constitutes only 25%, while the remainder is a share swap.
The deal now sees Prologis, a US giant with a $135 billion (£101 billion) market capitalisation and operations spanning 20 countries, absorb one of the limited number of listed vehicles offering direct exposure to UK and European data centre and logistics development. Analyst Bjorn Zietsman at Panmure Liberum highlights that investors will lose this ability with Segro's integration into Prologis.
The takeover is seen as a significant loss for the London stock market, diminishing its diversity and leaving a more homogenous mix of traditional office blocks and shopping centres. While Prologis has pledged to maintain a secondary listing in London, experience suggests trading often gravitates towards the primary US market, offering little long-term consolation for UK investors.