Canary Wharf lifted by bid revelations

Morgan Stanley's real estate fund has emerged as the front runner in the bid battle for Canary Wharf.

The US bank confirmed it is advising its own property investment fund in an approach it has made to Canary Wharf, the company behind the giant office development in London's Docklands.

It is understood that Morgan Stanley wants the existing Canary Wharf management, led by the chief executive George Iacobescu, to remain on board, but the management is not said to be involved at the current time. An industry source said: "Any likely buyer would want to involve management."

Executive management is so far remaining neutral, while a committee of non-executive directors is examining the approaches it has received and any other options the company has, such as selling off parts of the estate. Canary Wharf revealed "a number" of approaches on Friday but did not name the parties.

Morgan Stanley has a long history with Canary Wharf, being one of the first tenants on the estate in 1991, and it was an adviser on the company's flotation in 1999 (at 330p a share). Unusually, the bank owns the freehold to its building at 25 Cabot Square, whereas Canary Wharf owns most of the rest of the estate.

The bank's real estate funds have about $23bn (£14bn) invested in property, including $12bn in Europe, making it big enough to swallow Canary Wharf. It is thought Morgan Stanley's approach was pitched at about 260p to 270p a share, although analysts have mostly suggested 300p to 350p a share is needed for a successful bid. Canary Wharf shares closed up a further 5 per cent yesterday at 275p, up from a closing price of 190p on Thursday.

It is understood no party has so far made a firm bid. Other names thought to be in the contest include Canadian investment group Brascan, which has a 9 per cent shareholding.

Comments