This weekend, David Sleath has returned to his family home in Warwick for a much-needed break. “I haven’t spent as much time at home in the last few weeks as I would have liked,” he said.
The chief executive of the FTSE 100-listed warehouse giant Segro has spent the past four weeks building a case against a hostile takeover attempt by US rival Prologis.
Prologis has until 5pm on Wednesday to raise its offer – or walk away for six months.
The company made its first punt for Segro last month – a 925p-per-share offer that valued the British business at £12.6bn. Under the deal, investors would get 0.084 Prologis shares (no cash) for each Segro share they hold. Segro rebuffed the approach, arguing that it undervalued the company.
It may have a point. Founded in 1920 as the Slough Trading Company, Segro has traditionally been a “sheds” operator, focusing on warehouses. But data centres now make up a growing proportion of its headline rent at 8%. Its Slough trading estate, which sits on land with good grid access, now contains 31 data centres. Sleath says that in the next five to seven years, data centres could make up 30% of its revenue.
In recent months, UK industrial land has caught the eyes of big tech companies seeking to expand their AI infrastructure footprint. At the same time as Microsoft is cutting more than 4,500 jobs in other divisions, including Xbox, it is listing job ads on LinkedIn for “Land Acquisition Managers” based in London. Amazon is posting similar real estate roles.
The value of the UK data centre leasing market stands at $15bn-$18bn and is growing at a rate of 13% a year, according to analysis by Mordor. Segro and its US suitor have obviously spotted a sizable opportunity. But what is Segro’s portfolio of big boxes and industrial estates actually worth?
In a presentation to investors two weeks after the initial approach, Sleath argued for a valuation closer to £13 per share. “We have to be mindful of our duties to our shareholders,” Sleath told The Observer.
“If somebody does approach us with an offer that is compelling, then we have to consider it. But that hasn’t happened yet.” What would he consider? “It’s pretty clear from conversations [with shareholders] that anything beginning with a nine is not serious,” said Andrew Saunders, a real estate analyst at Shore Capital. “It needs to be at least £10 to be entertained with any seriousness.” Sleath acknowledged that the company is one of a flurry of FTSE 100 firms targeted for takeover in 2026, as share prices took a hit from the Iran war. Acquisition targets this year include Intertek, Schroders, Beazley and easyJet, which last week agreed to a £5.7bn takeover by the US asset manager Apollo Global Management.
“I’m not going to get caught up in the mentality of a great British company being taken off the market,” said Sleath. “[The deal] is what it is.”
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Last Thursday, Prologis reported second quarter revenues of almost $2.43bn (£1.8bn), beating analyst expectations of $2.16bn, and raised its full-year outlook. On an earnings call, Prologis CEO Dan Letter said the company will remain “disciplined on price” in any follow-up offer for Segro.
“We’ve got a very successful business that has a tremendous growth opportunity,” said Sleath. “But the ball is in Prologis’s court. I’m not going to guess what they might do. We just have to wait and see.”
Photograph by Chris Orange/Segro