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(Sharecast News) - Shares in Segro soared on Wednesday, after the blue chip rebuffed a 12.6bn takeover approach from US real estate giant Prologis.
San Francisco-based Prologis, a specialist in logistics facilities, confirmed it had approached Segro earlier in June with an indicative all-share proposal.
Under the terms of the proposed combination, Segro shareholders would receive 0.084 new Prologis shares for every Segro share they hold. Based on the closing price of 23 June, the deal implies a value of 925p for each Segro share. Following completion, Segro shareholders would hold around 10.5% of Prologis' issued share capital.
However, Segro said the board had "unanimously and unequivocally" rejected the proposal, arguing that it fell "a long way short" in terms of valuation.
It added that the approach was "opportunistically timed and sought to take advantage of the clear distinction between Segro's current share price and its highly attractive underlying business and strong prospects.
"This has been accentuated by major geopolitical issues, which have adversely impacted trading valuations across the UK and European real estate sectors relative to the US Reit sector."
Prologis has yet to walk away, however, and instead appealed directly to Segro's shareholders. It urged them to encourage the board to engage with it, arguing that a deal would create a "highly compelling" opportunity.
"The combination provides Segro shareholders will participation in a global platform with a track record of out-performance across key metrics and the successful integration of corporation transactions with the delivery of synergies," it said.
"Prologis believes that its global platform, balance sheet strength and diversified capital base can unlock the significant embedded value of Segro's development and data centre pipeline."
As at 1015 BST, shares in Segro had soared 16% to 862.8p.
Dan Coatsworth, head of markets at AJ Bell, said Prologis' initial offer was likely just an opening salvo.
He continued: "Whether an all-share bid will prove attractive to shareholders, given it would mean ending up with an investment in a much different entity, is open to question. Perhaps including a cash element would help smooth the passage of any deal.
"A chunkier premium may also be required. Should Prologis succeed with its pursuit, it would represent yet another large-cap loss from the UK market and a diminution in its breadth and quality."
Under Takeover Panel rules, Prologis has until 1700 BST on 22 July to either announced a firm offer or walk way, a so-called put up or shut up. Prologis, with a market value of around $141bn, is the world's largest logistics real estate investment trust.
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