Prologis, the world's largest industrial landlord, is set to expand further through an acquisition. The San Francisco-based Real Estate Investment Trust (REIT) was successful with its fourth offer to acquire rival Segro, the United Kingdom's largest REIT. The deal values Segro's equity at approximately US$18.8 billion.
Prologis announced on Tuesday that Segro's previously resistant board would recommend the transaction. The combined portfolios will form a global platform with total assets under management of approximately US$269 billion. For the United Kingdom, the transaction means the loss of its largest REIT, whose history spans over a century.
Strategic Expansion of European Presence
Segro's portfolio comprises approximately 117 million square feet across the UK and Europe and has become increasingly valuable due to its growing data centre pipeline. David Sleath, Segro CEO, stated that Prologis shared the conviction in the long-term structural drivers of demand for modern logistics and data centre infrastructure. He added that the combination would bring together two highly complementary businesses and create a compelling platform that combined Segro’s exceptional portfolio and development pipeline with Prologis’ existing European business, as well as its global scale, customer base and operational capabilities, whilst maintaining a shared commitment to disciplined capital allocation, customers and employees.
Prologis' European footprint is expected to grow by 47 percent to a regional operating portfolio of 368 million square feet. The deal includes a combined European development pipeline of 13 million square feet and an increase in Prologis' European land bank by 126 percent. The acquisition is expected to close in the first half of 2027, subject to legal and regulatory approvals as well as approval from Segro shareholders.
Previous Negotiations and Background
The news follows weeks of negotiations between the long-standing competitors, including three offers that were rejected by Segro's board. Segro's leadership had publicly described the earlier offers as 'opportunistic' and claimed Prologis was exploiting temporary market disruptions. The US REIT countered by calling the board's own valuation 'ambitious'.
The successful fourth offer hinged, among other things, on Prologis seeking a secondary listing on the London Stock Exchange. Daniel Letter, CEO of Prologis, stated that they had great respect for Segro, its employees, and the business built over many years. The constructive engagement between the leadership teams throughout the process reinforced confidence in the opportunity ahead of them.
