Another day and another US entity bidding for an undervalued UK-listed stock. Today, US logistics giant Prologis announced it had made an offer for SEGRO, the FTSE 100 REIT.
Prologis has made a 925p all-share approach for FTSE 100 warehouse landlord SEGRO, valuing the firm at £12.6 billion, a premium of nearly 25% to Tuesday’s closing price of 742p.
SEGRO’s board rejected it outright the same day.
The offer, which would see SEGRO shareholders receive 0.084 new Prologis shares per share held, is pitched at SEGRO’s last reported EPRA net tangible assets of 925p, effectively arguing there’s no premium to book value on offer, just a way out of the persistent discount SEGRO trades at on the market.
In addition to the longstanding discount to NAV, SEGRO offers an interesting route into data centres, driven by the burgeoning sector’s increased demand for its space.
“The expansion of logistics property plays into data centres is taking a dull area to more interesting places and that’s evident in the takeover interest in Segro,” said Dan Coatsworth, head of markets at AJ Bell.
“It’s hard to believe San Francisco’s Prologis would have been interested in Segro when it was simply focused on warehouses. Prologis specifically references the target’s pipeline of data centres in its rationale for the deal.
“Prologis urging shareholders to encourage Segro to engage suggests the initial all-share bid submitted last week is just its opening salvo and that Segro’s rejection won’t be the final word in the story.”
We will wait and see whether Prologis returns with an improved bid.