Bidder accuses Segro of ‘aspirational’ projections to justify rejecting £13.5bn offer
UK property group has resisted three proposals from US-listed real estate giant Prologis
The chief executive of Prologis has accused the board of UK property group Segro of relying on “very aspirational” projections as it resists a £13.5bn takeover bid by his company that would rank as the largest acquisition in London this year.
The US real estate giant has been stepping up pressure on London-listed Segro after going public last month with its first takeover proposal. Prologis said this week that it had made two further bids, which Segro had also rejected.
In an interview with the FT, Prologis boss Dan Letter said of Segro’s board: “It’s hard to see what they’re really thinking with the very aspirational business plan they’ve put out,” he added.
Since the initial offer, both sides have argued the case in press releases and presentations to investors.
Letter said his company was putting out information on its proposals, including an earlier 2024 bid, because of a lack of engagement from Segro’s board and that he was seeking a “constructive process”.
“We thought we would get better engagement from them as we continued to provide them proposals,” he said.
Segro has insisted that remaining as an independent company will provide superior returns for its shareholders, and said its shares had been valued at about £13 in a report it commissioned from commercial property firm CBRE — well above the 993p offered most recently by Prologis.
The offer from US-listed Prologis is largely made up of shares in itself but includes a 20 per cent cash component.
In a boost to Letter, the bid gained tentative backing on Tuesday from Norway’s sovereign wealth fund, which owns 8 per cent of Segro and 1 per cent of Prologis. “We believe the proposal merits consideration, and we encourage the boards of both Segro and Prologis to enter into constructive discussions,” the fund said.
Letter’s remarks came after Prologis representatives met with Segro management on Sunday. While the Norwegian wealth fund indicated it could be open to backing a deal, UK-based investor M&G said it would not support the latest takeover bid.
“The price that has been offered is way below what we would consider an acceptable offer for this set of assets,” said Michael Stiasny, head of UK equities at M&G, which owns about 1 per cent of Segro. He added that the bid did not “reflect the potential long-term upside” of Segro’s business.
Segro said: “Segro has engaged and met with Prologis management to understand Prologis’s ability to improve its financial terms to a level that could be capable of being recommended by the Board of Segro.” It added that Prologis had provided “no new information and made no improvement” to its latest proposal.
Shares in Segro fell about 3 per cent on Tuesday while Prologis stock rose about 0.6 per cent in morning trading in New York.
Under UK takeover rules, Prologis must make a firm offer by Wednesday or walk away from a deal, and it is encouraging Segro shareholders to urge the UK group’s board to back the deal.
While Segro has argued a higher bid would be needed, Letter suggested there were limits to how much he would pay to secure a deal, saying Prologis would remain “disciplined stewards of capital” as it sought to grow.
“They have an attractive portfolio that, if combined with our platform, we can do a lot more with and a lot faster,” he said of Segro.
“We’ve given them constructive, compelling offers that are good for both [sets of] shareholders. We will continue to be disciplined in how we execute this,” he said.