The boards of Prologis and Segro agreed final terms Tuesday on a recommended acquisition that hands Britain’s largest listed warehouse landlord to the world’s largest one. The headline number is about £14 billion, or $18.8 billion. It ends Segro’s run as an independent public company after a fight that started with a rejection.
Segro shareholders get 0.0920 new Prologis shares for each share they hold. They can instead elect a partial cash alternative — 258 pence in cash plus 0.0690 Prologis shares, roughly a quarter of the consideration in money — with the total cash pot capped at about £3.5 billion. Completion is scheduled for the first half of 2027. Prologis says the deal is broadly neutral to minimally dilutive to Core FFO and AFFO per share in the first full year after it closes.
Now the part almost nobody puts in the headline. That £14 billion was struck against prices on 21 July, the day Segro’s board said it was minded to accept, and it worked out to 1,031.7p a share. Priced off Prologis’s $144.15 close and a sterling-dollar rate of 1.3438 on 3 August, the same terms are worth 998.1p — about £13.5 billion. Roughly half a billion pounds went missing in two weeks, and not one penny of it had anything to do with Segro.
You are not selling for a price. You are buying a stock.
This mechanic gets waved through in every all-share deal and matters enormously in a cross-border one. Segro holders are not being paid £14 billion. They are being handed Prologis equity, denominated in dollars, and asked to hold it into 2027. Between the handshake and the cheque they own two risks they did not have before: Prologis’s share price, and the pound. The 3.3% that evaporated between 21 July and Monday is a preview, not an anomaly.
Our take: In June, Segro’s board called a 925p all-share approach “inadequate, opportunistic and one-sided” and the shares jumped 19% on the news. The board held out, Prologis went over its head to shareholders, and the price came up. Measured against the terms actually recommended Tuesday, the board won about 8%. Measured against the £14 billion it was reported to have won, 11.5% — on paper, on a date that has already passed. A board that rejects an opportunistic price and then accepts a floating one has not settled the argument about value. It has moved it to a variable nobody at Segro controls.
Why Prologis wanted it anyway
The strategic case does not depend on the price wobble. The combination creates a 368 million square foot European operating portfolio, expanding Prologis’s footprint on the continent by 47%. The combined development pipeline is 13 million square feet, and Prologis’s European land bank goes up 126%. That last figure is the prize: land you already own is the only cheap way to build sheds in markets where planning permission, not capital, is the binding constraint. You cannot assemble that one park at a time — and certainly not at a 14.4% premium to net tangible assets, which is what 1,031.7p represented against Segro’s 902p NTA. Against the undisturbed price, the premium is 39%.
Segro holders also keep the 10.14p interim dividend and could collect a final of up to 22.56p if declared before completion — which softens, slightly, the cost of waiting.
What to watch
- Prologis stock and the dollar. For anyone taking all shares, the value of this deal tracks those two things until it closes. No floor and no collar appear in the reported terms.
- “Best and final.” Under the UK Takeover Code that language binds. Absent a competing offer, Prologis cannot go higher — so the only route to a better outcome for Segro holders is another bidder, and none has appeared.
- Forced index selling. Segro leaves the FTSE 100 on completion and its holders receive shares in a US REIT. Plenty of UK trackers cannot hold those. Watch how that supply gets absorbed.
- The 2027 calendar. Ten-plus months to close is ten-plus months of exposure. Deal spreads exist for a reason.
The number in the press release is a snapshot of a day in July. The number Segro shareholders actually receive gets set on a day in 2027 that nobody in this deal controls.