Jupiter Fund Management says Prologis' £12.6B all-stock offer undervalues Segro's data center pipeline. The board rejected it as opportunistic; a higher price could unlock the deal.
Prologis Inc. is facing pressure from Segro Plc investors to improve its £12.6 billion all-stock offer for the UK industrial landlord, a deal that would give the world's largest industrial REIT a pipeline of data center assets.
Jupiter Fund Management, which holds close to 1% of Segro, said the offer comes in "slightly below" the value of Segro's underlying assets. Segro historically traded at a premium to net asset value, said Chris Morrison, an investment manager at Jupiter.
Like most UK landlords, Segro has traded at a persistent discount to reported asset values since interest rates began rising in 2022. Before Prologis' interest emerged, the discount was nearly 20%.
By contrast, US data center REITs such as Equinix Inc. and Digital Realty Trust Inc. trade at elevated earnings multiples because the market prices in AI-driven growth. Prologis said a combination would "unlock the significant embedded value of Segro's development and data center pipeline."
Segro called the offer "opportunistically timed" and far below its own valuation. The company saw a gradual recovery in its share price derailed by the outbreak of the Iran war, which pushed bond yields higher and weighed on property valuations.
Matthew Norris, head of real estate securities at Gravis Capital Management, which holds 0.11% of Segro, said net asset value alone does not capture the strategic worth of Segro.
Prologis, with an Alpha Score of 45/100 (Mixed), faces a test of its acquisition strategy. The company has not commented on whether it will raise its offer. Segro's board has rejected the bid as too low.
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