Brascan bid for Canary Wharf wins key support

The Canadian property developer Brascan yesterday appeared to scupper a rival bid for Canary Wharf from Morgan Stanley by securing enough support to block the US bank's offer, which it also matched.

Brascan increased its offer from 270p a share to 275p or £1.6bn - the same level as the Morgan Stanley bid that was recommended by the Canary Wharf board. Canary Wharf owns the giant Docklands office development in London.

Crucially, the Brascan offer came with the support of 28.9 per cent of the votes eligible to be cast at a shareholder meeting later this month to consider the Morgan Stanley bid.

Under the terms of the scheme of arrangement that the US bank has used for its offer, it needs 75 per cent support for the bid to be accepted. Brascan yesterday said it had the support of Franklin Mutual, which has 6.8 per cent of Canary Wharf. The Canadian company owns 9 per cent itself and it has the backing of the 9 per cent owned by Canary Wharf's founder, Paul Reichmann. Morgan Stanley is now expected to revise its offer, to turn it into a conventional bid that requires only 50 per cent of votes to win.

There is also speculation that the US bank will raise its bid. Even if it does not, there would still be differences between the two bids. Morgan Stanley is offering a greater proportion of equity, and it claims these shares will be more liquid than those proposed by Brascan.

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