LONDON: Prologis Inc. and SEGRO plc announced they have reached agreement on a recommended share offer with a partial cash alternative valued at approximately £14 billion, creating what would be the world’s largest logistics real estate investment trust.
The combination, to be effected through a scheme of arrangement under Part 26 of the Companies Act 2006, would give SEGRO shareholders 0.0920 new Prologis shares for each SEGRO share held, the companies said in a joint statement.
Under the terms, SEGRO shareholders may elect to receive a partial cash alternative of up to £3.51 billion, representing approximately 25 per cent of the total consideration value based on a fixed price of 1,031.7 pence per SEGRO share. Shareholders who elect for the full cash alternative would receive 258 pence in cash and 0.0690 new Prologis shares for each SEGRO share.
Based on Prologis’ closing share price of $149.94 and a GBP:USD exchange rate of 1.3371 on July 21, the combination values each SEGRO share at 1,031.7 pence, representing a premium of approximately 39 per cent to SEGRO’s closing price of 742 pence on June 23, the day prior to the commencement of the offer period.
Including the 2026 final dividend of up to 22.56 pence per share, which SEGRO shareholders would be entitled to receive and retain, the total value rises to 1,054.3 pence per share, representing a 42.1 per cent premium to the June 23 closing price.
SEGRO shareholders would hold approximately 8.9 per cent of the combined group’s shares, based on the assumption that the partial cash alternative is fully taken up and using each company’s fully diluted share capital as of Aug. 3.
The SEGRO board, advised by Evercore and Morgan Stanley, has unanimously recommended the combination. Directors holding SEGRO shares, representing approximately 0.245 per cent of issued share capital, have provided irrevocable undertakings to vote in favour.
Commenting on the Combination, Daniel S. Letter, Chief Executive Officer of Prologis, said: “We are pleased to have reached agreement with the SEGRO Board on a combination that we believe will create meaningful value. This deal brings together SEGRO’s exceptional portfolio and customer relationships with Prologis’ global platform, operating expertise and financial strength.
We have great respect for SEGRO, its people and the business they have built over many years. The constructive engagement between our leadership teams throughout this process has reinforced our confidence in the opportunity ahead.
As we move forward, we will approach the work ahead thoughtfully and deliberately. We look forward to building on the strengths of both companies and creating even greater value for our customers and shareholders.”
Commenting on the Combination, David Sleath, Chief Executive Officer of SEGRO, said: “SEGRO has built a unique business over many decades, assembling an irreplicable portfolio of high-quality industrial, logistics and data centre assets in some of Europe’s most attractive locations. Through the dedication of our people and the strength of our customer relationships, we have a proven track record of value creation over many years.
Prologis shares our conviction in the long-term structural drivers underpinning demand for modern logistics and data centre infrastructure. We believe the combination would bring together two highly complementary businesses and create a compelling platform, combining SEGRO’s exceptional portfolio and development pipeline with Prologis’ existing European business and global scale, customer franchise and operational capabilities, while retaining a shared commitment to disciplined capital allocation, customers and people.
Prologis’ proposal provides SEGRO shareholders with a compelling opportunity to realise the value created by SEGRO and benefit from the future growth of the Combined Group.
I would like to thank our colleagues for their unwavering commitment and contribution to SEGRO’s success. Their dedication has been instrumental in building the exceptional business we are today.”
Strategic Rationale
Prologis, the global leader in logistics real estate with $138 billion in market capitalisation, has a proven track record of value-creating mergers and acquisitions, including successful all-share acquisitions of Duke Realty Corp. in 2022, Liberty Property Trust in 2019 and DCT Industrial Trust in 2018.
The company has maintained a significant presence in the UK and Europe since 1997, building £28 billion of assets under management across 251 million square feet in 12 countries and 50 markets. Prologis has invested £5.6 billion in the UK economy over the past decade with an additional £5.5 billion publicly committed.
The combination would bring together two high-quality portfolios with approximately £200 billion of assets under management and create a combined European operating portfolio of approximately 368 million square feet, more than tripling SEGRO’s existing European footprint.
Prologis expects the transaction to deliver significant cost and operational efficiencies, with the combination expected to have a broadly neutral to minimally dilutive impact on Core FFO and AFFO per Prologis share in the first full year following completion, assuming annualised run-rate synergies.
The companies also highlighted the significant combined data centre pipeline, bringing together SEGRO’s 1.4 GVA medium-term pipeline with Prologis’ secured and advanced stages pipeline of 5.8 GW and more than 10 GW of identified opportunities.
Dividend Provisions
SEGRO shareholders would be entitled to receive and retain the 2026 interim dividend of up to 10.14 pence per share without any reduction to the combination consideration.
If declared prior to the effective date, shareholders would also receive the 2026 final dividend of up to 22.56 pence per share. To facilitate this, SEGRO expects to hold its 2027 annual general meeting no later than March 2027 to consider the dividend declaration, with the scheme hearing and court order delivery delayed until after that meeting.
Should the timetable extend beyond the anticipated completion date, shareholders would also be entitled to receive any 2027 interim dividend of up to 10.55 pence per share and any 2027 final dividend of up to 23.52 pence per share, in each case if announced and declared in the ordinary course prior to the effective date.
Conditions and Timetable
The combination is subject to several conditions, including approval by requisite majorities of scheme shareholders at a court meeting and SEGRO shareholders at a general meeting, sanction by the court, receipt of certain anti-trust and regulatory approvals, and the secondary listing of Prologis shares on the London Stock Exchange’s main market.
Prologis reserves the right to implement the combination by way of a takeover offer, subject to panel consent and the terms of the cooperation agreement.
The effective date is expected during the first half of 2027.
Prologis expects to maintain its A2/A credit ratings from Moody’s and S&P following the transaction.
