Brascan says it could offer counterbid for Canary Wharf

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The Independent Online

The Canadian property developer Brascan declared it might make a counterbid for Canary Wharf yesterday, plunging the long-running £1.5bn takeover saga surrounding the property company into further confusion and uncertainty.

Canary Wharf is in exclusive negotiations with a consortium led by Morgan Stanley but analysts have already cast doubt on whether this will lead to a full offer being put forward. Brascan, a 9 per cent shareholder in Canary Wharf, has added further complications.

Brascan, led by Bruce Flatt, its president and chief executive, not only suggested that it might trump the Morgan Stanley indicative offer but it added that, even if it did not put forward its own bid, it would not accept the Morgan Stanley one.

It is thought other significant investors, including Paul Reichmann, who holds 8 per cent, would also resist Morgan Stanley's approach, which many believe undervalues the company.

The Canadian company's approach, thought to be worth 240p a share in cash, was turned down last week by Canary Wharf. The Morgan Stanley bid is worth 220p a share in cash, plus a stake in a new Canary Wharf vehicle that it says is worth a further 35p a share. Alan Patterson, a property analyst at HSBC, said: "It has become a bit of a game. It's almost like we're going round in circles. My hunch is that a bid will not go through."

Mr Patterson said that he "couldn't understand" why the Canary Wharf board had been willing to given a tentative recommendation to the Morgan Stanley bid. "There is a high probability that this [bid] will be blocked. It is not attractive to many people."

Morgan Stanley needs the backing of 75 per cent of shareholders but it cannot count on Canary Wharf's biggest shareholder. Simon Glick owns more than 14 per cent of the company but he cannot vote as he is part of the Morgan Stanley consortium. Analysts said that, even if Morgan Stanley produces a full offer that is formally recommended, it may be difficult to get the required shareholder support.

Brascan said in a statement it was considering making an offer "in conjunction with certain institutional investors", though it added that there was "no certainty" of this coming off. There was speculation it may also team up with Mr Reichmann, while others suggested the Canadian company was trying to get Morgan Stanley to raise its bid. Mr Reichmann has not so far declared his hand.

Andrew Penny, an analyst at JP Morgan, said: "We think the break-up value is 295p [a share]. The climate has changed, many investors will now only sell at a full price, not just a fair price."

Shares in Canary Wharf closed up 1.5p at 244p.

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