Segro rejects latest £13.5bn tilt by Prologis

(Sharecast News) - Segro has rejected a sweetened £13.5bn approach from Prologis, the US logistics giant confirmed on Monday, as it ramped up its hostile campaign to secure the British business. Prologis said its third approach consisted of 0.089 new Prologis shares for each Segro share, plus a partial cash alternative of up to £2.7bn, valuing it at 993p per share. That represents a 6% increase on its first proposal, made in June.

The approach, which was made last week, had been rejected, Prologis confirmed. But it urged shareholders to back the offer, arguing that Segro's assessment of its own value was "unrealistic".

Prologis first approached the UK landlord at the end of June, but each potential bid has been rejected. In a statement made earlier this month, the blue chip accused Prologis of trying to buy the company "on the cheap". It also flagged its own standalone growth strategy and "compelling" prospects, which it said underpinned superior shareholder value creation to Prologis' then proposal.

It concluded that the offer as it then stood meant there was no basis for further engagement with its US suitor.

However, on Monday Prologis - which specialises in data centres in the US - insisted "the standalone case doesn't add up". It said Segro's discount rate applied of 8% "understates both execution risk and the cost of capital in relation to speculative, long-dated, often un-zoned and untenanted development projects".

It concluded: "Prologis' proposal provides upfront value, greater flexibility and long-term upside opportunity. Segro's standalone plan relies on flawless execution of a significant, long-dated development pipeline, substantial third-party funding and unjustified valuation."

Segro, which has a portfolio of warehouses and data centres, primarily based in the south east, has yet to comment on the latest approach.

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