By Liza Helps, Property Editor, Logistics Matters

IF THAT were not enough the SEGRO Board has called a rebuttal announcement and presentation by Prologis,  published only this morning, as an ‘attempt to buy SEGRO on the cheap’ and ‘does not reflect any basis for further engagement’.

Logistics Matters reported on the news  of the takeover just over two weeks ago. For those that are interested SEGRO, is the UK’s largest Real Estate Investment Trust (REIT), and owns and manages approximately 27 million ft2 of lettable warehouse and industrial space across the UK. In total it manages properties worth around £22 billion. 

Prologis owns and manages approximately 35.3 million ft2 of logistics warehouse space across the UK, spanning 207 buildings.

Combined they would have 62.2 million ft2 of warehouse space in the UK – the vast majority Grade A space. Rough calculations based on total Grade A space of 465 million ft2 nationwide – means the merger could see one investor developer company controlling some 13% plus of all Grade A industrial and logistics space in the UK not including future space under construction, already in the pipeline, or land controlled or under option to be developed.

In a H1 2006 Trading update SEGRO noted that its land bank for industrial and logistics development could provide £429 million of potential future headline rent. It said that in H1 it had already signed deals and transactions worth £53 million in new headline rent and that this included £24 million of new pre-lets signed, with further active negotiations underway, resulting in a record level of projects in the current and near-term pipeline

In a statement this morning Prologis said it believes constructive engagement remains the best path for the Board of SEGRO to maximise long-term value for SEGRO shareholders and wider stakeholders, because Prologis brings both a superior platform and a larger data centre opportunity; Prologis’ platform creates advantages that cannot be replicated by SEGRO; SEGRO’s public market valuation – 742 pence per share from which Prologis based its £12.6 billion offer (925 pence per share) reflects its structural constraints; and that strategic rationale is clear — constructive engagement creates the best outcome

Under the deal offered by Prologis, SEGRO shareholders would hold approximately 10.5 per cent of Prologis’ issued share capital.

Prologis believes that the deal is a highly compelling opportunity for SEGRO shareholders. SEGRO shareholders would receive shares in the world’s largest logistics REIT with a $140.9 billion market capitalisation, unlocking, on closing, significant upside to the current share price.

“Furthermore, the deal would provide SEGRO shareholders with participation in a global platform with a track record of outperformance across key metrics and the successful integration of major corporate transactions with the delivery of synergies. Prologis believes these factors will provide SEGRO shareholders with accelerated growth compared to the growth available to them in a standalone SEGRO.”

SEGRO Chairman Andy Harrison said: “The Board takes its fiduciary duties very seriously, but the value of Prologis’s current, rejected proposal does not reflect any basis for further engagement.

“Prologis’s latest announcement and presentation are consistent with its attempt to buy SEGRO on the cheap. Its proposal fails to reflect the quality, scarcity and growth embedded in our business and is an inadequate, opportunistic and one-sided alternative that would dilute our shareholders’ exposure to our unique and irreplicable portfolio and outstanding prospects.”

Prologis has until 22 July to submit a formal offer. It has already noted that there can be no certainty that an offer for SEGRO will be made.