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Canary Wharf to be bought by Qatar for £2.6bn Canary Wharf to be bought by Qatar for £2.6bn
(about 3 hours later)
Canary Wharf is to be bought by Qatar’s sovereign wealth fund and Brookfield Properties for £2.6 billion, after its majority owner Songbird Estates recommended that smaller shareholders accept the 350p a share offer. Canarf Wharf's majority owner Songbird Estates has given in to a £2.6 billion bid from Qatar and Canada after international attempts to find another buyer foundered.
Songbird told shareholders as recently as 12 January to reject the offer, saying it undervalued the company. Songbird, itself a 69 per cent shareholder in Canary Wharf Group, believes the 350p-a-share final offer from the Qatar Investment Authority, headed by Sheikh Abdullah bin Mohamed bin Saud al-Thani, and Canadian developer Brookfield undervalues the business and put a 381p price-tag on itself early in the bid saga.
But in a surprise U-turn, it has changed its stance after the Qatar Investment Authority-led bid won the backing of the holders of 86 per cent of its shares. The Qataris already own 28.6 per cent of Songbird, but the battle was decided away from the public eye as the firm admitted that three of its major private investors were likely to accept the 350p-a-share bid.The joint venture — advised by investment banking rainmaker Ken Costa - will now oversee a huge development pipeline including Wood Wharf in Docklands and the South Bank’s Shell Centre.
"The Board recommends that, in the event that the offer becomes or is declared unconditional as to acceptances, Shareholders should accept the offer," Songbird said in a statement. The retreat comes less than 24 hours before the offer lapses at 1pm tomorrow and after the Songbird board unsuccessfully cast around the world for a rival bidder.
However, it reiterated that it believes the price tag "does not reflect the full value of the business, its unique operating platform and its prospects." "No such offer has been forthcoming to date and the board believes that none will now be forthcoming before the first closing date," the company said.
The QIA and Brookfield started its pursuit of Songbird in November with an initial £2.2 billion approach in December, which was rebuffed. It came back with the higher bid the following month. The US investor, Simon Glick, holds 25.1 per cent, the China Investment Corporation 15.8 per cent and Morgan Stanley 8.5 per cent.
Both parties already have significant interest in Canary Wharf. The QIA owns 28.6 per cent of Songbird, while Brookfield holds 22 per cent of Canary Wharf Group. With all these backing the offer - as well as some shareholders in Songbird’s relatively small free float — the bidders can now command more than 85 per cent of the company’s shares.
A major sticking point on the deal had been the approval of Songbird's other major shareholders the China Investment Corporation, New York-based investor Simon Glick and Morgan Stanley, who together own more than 50 per cent of Songbird shares. The AIM-listed firm warned minority shareholders could become trapped in the company if the joint venture fails to reach the 90 per cent point at which it can automatically buy up remaining shares, but decides to go ahead with a delisting anyway.
Songbird said it understood that they now intend to accept the revised £2.6 billion offer. Songbird’s new owners have committed to retain existing key management.
It comes as Canary Wharf is preparing to add two major new developments to its docklands estate: a 60-storey residential tower and a 20-acre waterside site comprising residential and commercial property and retail space. Sir George Iacobescu, chairman and chief executive of CWG and architect of the modern Canary Wharf, said: "In the future Songbird and Canary Wharf will become one and the same company, which will be beneficial for the company.
It will add to Qatar's already significant presence in London, including the Shard, department store Harrods and the former London 2012 Olympic Village. "As the person running Canary Wharf, two of the biggest companies in the world have decided to buy into the future of the company, that’s a major endorsement of the company and the management."
The complex ownership structure of Songbird and CWG is the relic of a 2004 takeover battle as well as a 2009 bailout for Songbird. Shares rose 8 per cent or 27.25p to 348.75p.