UK's Segro rejects $18.2 billion Prologis bid as takeover tussle intensifies

By Prerna Bedi and Simone Lobo

July 20 (Reuters) - Britain's Segro on Monday rejected a higher £13.5 billion ($18.2 billion) takeover bid from Prologis, escalating a standoff as the U.S. warehousing giant urged its rival's shareholders to push the board to agree a deal.

The rebuff comes just two days before a deadline to formalise a deal under British takeover rules, and as Segro insisted it was worth a lot more. If a deal is agreed, it could result in one of the biggest takeovers of a UK-listed company.

"The Board does not believe that Prologis's latest proposal to acquire Segro reflects the quality, scarcity or long-term prospects of Segro's portfolio and platform," Chairman Andy Harrison said in a statement.

Prologis and Segro also confirmed that the U.S. group had proposed a takeover in March 2024, which was turned down.

Shares in Segro fell as much as 2.2% as investors worried Prologis might back out of a deal, before recovering some ground by 0912 GMT to trade down 0.3%.

Since Prologis' interest became public on June 24, Segro shares have gained nearly 21%, but are well below the proposal price.

Prologis was down 0.8% in U.S. premarket trading.

PROLOGIS APPEALS TO SEGRO SHAREHOLDERS

Prologis' third proposal valued Segro at £9.93 per share and consisted of 0.0890 Prologis shares for each Segro share plus a partial cash alternative of up to £2.7 billion. It also said the feasibility of a secondary London listing would be explored.

The proposal is at a near 34% premium to Segro's closing price the day before Prologis' interest became public.

"Prologis' proposal provides upfront value, greater flexibility and long-term upside opportunity. Prologis urges Segro shareholders to encourage the Board of Segro to recommend the Combination," Prologis said.

The bid appears to address many of investors' expectations, Kepler Cheuvreux analyst Frederic Renard said, adding that Segro's rejection was "hardly surprising given that it has effectively anchored its valuation expectations at around 1,300 p".

"We believe some shareholders are increasingly vocal in arguing that the board should engage with Prologis," he said, without naming any.

Segro, which owns around 10.9 million square metres of space across Europe, has been building out a data centre pipeline to capture a share of the booming AI industry.

UK-listed companies have drawn growing international interest as British firms trade at relatively low valuations, with easyJet and Intertek among the blue-chip companies attracting takeover interest in recent months.

($1 = 0.7431 pounds)

(Reporting by Prerna Bedi, Simone Lobo and Raechel Thankam Job in Bengaluru; Writing by Pushkala Aripaka; additional reporting by Nithyashree R B; Editing by Joe Bavier and Jan Harvey)