Segro to acquire Tritax EuroBox for $1.44bn

November 2024 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

November 2024 Issue

Segro Plc has agreed to acquire Tritax EuroBox in an all-share offer valuing the European logistics real estate firm at about $1.44bn, including debt.

The deal, which has the backing of Tritax’s board, implies a transaction value of about 68.4 pence per share – a nearly 3 percent premium to the company’s closing price on the day before the deal was announced in September.

Under the terms of the deal, Tritax shareholders will get 0.0765 new Segro shares. In addition, Tritax EuroBox shareholders will be entitled to receive and retain a dividend of 1.25 cents per share, equivalent to approximately 1.05 pence per share at the current exchange rate, in respect of the quarter ending 30 September 2024.

Segro said the offer represents a premium of 27 percent compared to the Tritax EuroBox closing price of 53.8 pence on 31 May, which it said was the last day before it made the offer. The offer price is also a discount of roughly 14 percent to Tritax EuroBox’s last reported IFRS net asset value of 93.9 cents per share as at 31 March and an implied topped-up net initial yield of 5.2 percent.

The transaction values EuroBox’s issued share capital at approximately £552m, which, based on Tritax EuroBox’s net debt as at 31 March 2024, implies an enterprise value of approximately £1.1bn. Existing Segro shareholders will own approximately 96 percent of the combined company while existing Tritax EuroBox shareholders will own approximately 4 percent. The deal is expected to close before the end of 2024.

“This transaction offers the opportunity to acquire a high quality portfolio of big box warehouses in core European markets which would complement and enhance our existing assets,” said David Sleath, chief executive of Segro. “The management of the portfolio will be internalised on completion, taking advantage of economies of scale from our existing, locally-based operating platform.

“We intend to apply the long-established Segro strategy of disciplined capital allocation and operational excellence, based on an efficient and resilient corporate and capital structure and the Responsible Segro principles as we do for all assets we own and manage,” he continued. “While shareholders can expect this approach to lead to some capital recycling, we recognise the high quality of the portfolio assembled by the Manager and look forward to working with it for the benefit of our new and existing shareholders.”

“The transaction with Segro represents a compelling opportunity for Tritax EuroBox shareholders to achieve a significant and immediate uplift in the value of their investment and stronger total shareholder returns, with the option either to retain exposure to the European industrial and logistics sector through holding shares in the largest and most liquid REIT in Europe, or to sell their New SEGRO Shares for cash, taking advantage of SEGRO’s significantly greater trading liquidity,” said Robert Orr, chair of Tritax EuroBox. “The Board is pleased to recommend the Transaction to Tritax EuroBox Shareholders.”

Tritax EuroBox’s properties span seven countries in mainland Europe, focusing on logistics and distribution supply chains, serving clients in the manufacturing, pharmaceuticals, retail and ecommerce sectors.

The deal is the latest in an increasingly active logistics sector. Dealmaking in the space is likely to continue to heat up as logistics properties are considered one of the most attractive parts of the commercial real estate sector at present, amid strong demand from the ecommerce industry. To that end, in mid-September Blackstone announced a roughly €1bn deal to buy a majority stake in a large European logistics portfolio.

Richard Summerfield