UK's Segro signals support for Prologis' last-ditch $18.8 billion takeover bid

By Prerna Bedi and Pushkala Aripaka

July 22 (Reuters) - British warehousing group Segro said on Wednesday it was minded to back Prologis' £14 billion ($18.8 billion) takeover bid after investors urged the two sides to keep talking, as they also secured a last-minute extension to a takeover deadline.

Shares of Segro, which rose as much as 5.6% to £9.18 after Prologis' "best and final" proposal earlier in the day, closed 3% higher but remained well below the bid price of £10.32 per share.

Segro's board unanimously concluded that the financial terms of the proposal were "at a level that it would be minded to recommend to SEGRO shareholders" if a formal offer were to be made, the company said in a statement.

The proposal comprises 0.0920 Prologis shares and a partial cash alternative of up to £3.5 billion, while retaining the possibility of a secondary London listing, marking an improvement from the third bid Segro rejected on Monday.

Prologis now has until 1600 GMT on August 12 to formalise a takeover or walk away. Its shares were down 4.15% by 1604 GMT.

MULTIPLE APPROACHES REJECTED

Segro had previously insisted the bids undervalued it while turning down approaches from Prologis going back to March 2024.

If a deal is agreed, it could be one of the biggest foreign takeovers of a UK-listed company, LSEG data showed, and add to record levels of dealmaking in the country.

Following further discussions, Segro said Prologis would commit contractually to establish a secondary listing on the London Stock Exchange — a move analysts have said would appeal to Segro's British investors.

"Prologis welcomes the additional time afforded by the extension and is ready to work with the SEGRO Board in reaching an outcome that delivers value for all stakeholders," it said in a statement.

Its latest bid is at a 45% premium to Segro's closing price the day before Prologis' interest became public on June 24.

Segro, which owns around 10.9 million square metres of space across Europe, and Prologis, which counts Amazon, FedEx and UPS as customers, have been building out a data centre pipeline to tap into the booming AI industry.

SHAREHOLDER PRESSURE

Investors including APG Asset Management, Norges Bank and CCLA Investment Management had urged the companies to engage in talks, saying a combination would be valuable.

"We remain of the view that a collaborative process offers the greatest prospect of achieving a successful outcome of unlocking the potential benefits of a transaction," APG said.

The fund manager and Norges are among the top three shareholders in Segro, and they are also investors in Prologis. CCLA, meanwhile, is a smaller investor in Segro.

The investors declined to comment on the latest proposal and referred to their previous statements.

($1 = 0.7478 pounds)

(Reporting by Prerna Bedi, Pushkala Aripaka and Anushka Chourasia in Bengaluru; additional reporting by Nithyashree R B and Simone Lobo; Editing by Subhranshu Sahu, Kirsten Donovan, Louise Heavens and Alan Barona)