In a move to further consolidate its position as the world's largest owner of industrial real estate , Prologis is ramping up its efforts to acquire the British company Segro, mobilizing the rival's shareholders in an attempt to convince its board of directors of the merits of the transaction.
With 120 million square meters spread across 20 countries, Prologis released a letter on Thursday, July 9th, stating that it had held constructive talks with a group of Segro shareholders and requesting their support in encouraging company executives to open a channel for dialogue.
"Prologis remains willing to engage in constructive dialogue with Segro's board and believes that a collaborative dialogue would allow both companies to explore the full potential of a combination and ensure that shareholders could assess all available opportunities," reads an excerpt from the letter.
"Prologis urges Segro's shareholders to encourage Segro's board to engage in dialogue with Prologis so that a binding offer can be presented to Segro's shareholders for their consideration," the company continues.
The letter was released after Segro's board rejected, at the end of June, the proposal presented by Prologis to acquire the company for £12.6 billion (US$16.6 billion). The justification was that the offer was opportunistic and was "far below Segro's own view of its own value".
In the letter released today, Prologis states that the combination of the companies "offers Segro shareholders a substantial initial premium and participation in a long-term value creation opportunity through ownership of the combined platform."
The proposal presented by Prologis stipulates that Segro shareholders will receive 0.084 new Prologis shares for each Segro share held. Based on the share price on the date of the proposal, this implies a value of £9.25 (US$12.35) per Segro share.
If the merger goes through, Segro shareholders will own approximately 10.5% of the global platform resulting from the combination with Prologis.
The acquisition, if completed on these terms, will represent Prologis' largest transaction since its purchase of Duke Realty in 2022 for US$26 billion, including debt.
The acquisition of Segro would consolidate the American company's presence in the industrial warehouse market, especially in Europe. The British company owns, manages, and develops warehouses, industrial properties, and data centers in the United Kingdom and seven other countries on the continent, with a portfolio of 10.9 million square meters.
The operation would also expand Prologis' presence in the data center market, a segment that has been gaining strength worldwide with the advancement of artificial intelligence (AI) .
In the letter, Prologis states that Segro will benefit from the experience the company has been acquiring in this segment. The company has a portfolio of 30 projects with guaranteed energy or in an advanced stage of development and a pipeline of more than 150 projects under analysis.
"Segro's shareholders have the opportunity to benefit from a more experienced, larger, and better-capitalized data center platform, capable of capturing and maximizing the long-term value of both companies' data center projects, as well as the growth potential of Prologis' energy infrastructure," another excerpt from the letter states.
However, Prologis' initiative was ineffective. Segro reinforced the position adopted in June, stating that the value of the current proposal does not justify resuming negotiations. The company also asked its shareholders not to take any action, according to The Wall Street Journal (WSJ) .
Listed on the New York Stock Exchange (NYSE), Prologis has a market cap of US$135.3 billion, with its shares up nearly 10% this year.
