Paul Reichmann, the founder of the Canary Wharf property group, may start the new year without a seat on the board of the £1.6bn company after a spectacular falling out with his fellow directors over the sale of the business.
Relations between Mr Reichmann, who has a 9 per cent stake, and the rest of the Canary Wharf board have been stretched to breaking point by his attempts to scupper a deal to sell the company to Morgan Stanley. Mr Reichmann's refusal to support a key disposal plan ahead of the Morgan Stanley deal has proved the final straw, and the independent directors believe his position is now untenable. If he does not resign in the New Year, it is understood the board is prepared to force him out.
Canary Wharf shareholders meet today to approve the sale of two of the group's properties for £1.1bn. The disposal is a condition of the deal with Morgan Stanley. Its 265p-a-share offer has been recommended by Canary Wharf's independent directors, but will fall through without these disposals. Mr Reichmann had given his support to the disposal plan, but reneged on his promise last week and vowed to vote against the sale. Even though Canary Wharf is confident of winning today's vote, Mr Reichmann's u-turn has provoked outrage from the independent directors. But although reconciliation looks impossible, Sir Martin Jacomb, Canary Wharf's chairman, is likely to wait until after the Christmas period in the hope that Mr Reichmann resigns of his own accord.
The group needs 51 per cent of shareholders to support the sale of the properties. But even if it is agreed, Morgan Stanley still has an uphill task in securing its takeover of the group. Mr Reichmann plans to launch his own bid for Canary Wharf, and has the support of another shareholder, Brascan, a Canadian energy and property company. Together they can block the Morgan Stanley bid, and are planning to launch their own bids in January. Mr Reichmann stood aside as chairman of Canary Wharf in October in order to pursue his own bid for the company, but has remained on the board as an executive director.Reuse content