Segro, a UK-based property investment firm, has agreed to a £14 billion takeover from US rival Prologis.
The deal would bring together two industrial property giants that are both increasing their exposure to the data centre market.
Both companies have been expanding their activities in the sector as demand for new facilities grows due to the continued adoption of cloud services, artificial intelligence and high-performance computing.
That explosive growth has led to numerous acquisitions over the last few years. Earlier this year Antin Infrastructure Partners announced that it was acquiring atNorth, while over in the US investment giant Blackrock announced that it was set to spend $5 billion on acquiring Aligned Data Centers.
Originally, Segro had rebuffed Prologis’ acquisition attempt. The company announced in June that it had formally rejected an initial £12.6 billion offer, as well as two subsequent offers that it had argued was “opportunistic” and undervalued the company. Now, however, the board has unanimously backed the £14 billion offer.
What would the deal mean for Segro’s data centres?
Segro owns around 10.9 million sq m of industrial and logistics space across Europe, with data centres becoming an increasingly important part of its portfolio.
The company traces its origins to the Slough Trading Estate, which was established after a military repair depot was converted into an industrial estate in 1920. While the estate has hosted a range of businesses over the past century, it has since become one of the world’s most significant data centre locations.
A successful takeover would therefore give California-based Prologis access to a sizable existing portfolio of digital infrastructure assets, as well as Segro’s wider land and development pipeline across Europe.
Prologis is best known as one of the world’s largest owners of logistics property, counting Amazon, FedEx and UPS among its customers. However, it has also been developing data centres to take advantage of the rising demand for digital infrastructure.
That could make Segro particularly attractive. Suitable sites with access to sufficient electricity are becoming increasingly difficult to secure, especially around established markets such as London, where grid capacity and planning constraints continue to hold back new development.
While Prologis has yet to outline exactly what the takeover would mean for Segro’s data centre portfolio, gaining control of the company’s position in Slough would immediately expand its presence in one of Europe’s most established markets.
That’s getting ahead of ourselves just a little bit, however. A formal takeover offer has yet to be made, but the support of Segro’s board removes one of the most significant obstacles standing in Prologis’s way. The company now has until August 12 to confirm the takeover.
