Prologis' UK warehouse bid is ready for delivery

Segro’s board may conceivably be right that its logistics and data-centre developments will justify a higher valuation over time. Panmure Liberum analysts reckon the UK warehouse owner is worth closer to £13 per share, after factoring in the value of future projects. The question is whether an acquirer should pay today for gains that depend on years of investment and execution. Shareholders may instead conclude, on the balance of probabilities, that the premium represents adequate compensation for the hypothetical future upside.

A simple price-earning calculation makes the point. Segro recently told investors that it expects around 50 pence of earnings per share in 2030. The group's average 12-month trailing valuation multiple over the past five years is 27.1, according to LSEG Datastream. That suggests the stock might be worth £13.57 at the end of 2030. Discount to today at 8%, and the present value would be £9.60 per share, which is below Prologis' offer. For further comparison, the mean analyst target price for Segro's shares is currently £9.27, according to LSEG data, which is also below the latest bid proposal. The upshot is that the target should probably accept.