Canary Wharf rises higher as Reichmann prepares to bid

Paul Reichmann said yesterday he was confident of winning control of Canary Wharf after digesting the details of Morgan Stanley's latest £1.55bn approach for the Docklands property group.

Mr Reichmann, the company's founder, said he would tender his 7 per cent stake to the highest bidder. But a spokesman said: "Mr Reichmann believes the consortium he is forming will be making the highest offer."

Canary Wharf's shares rose 8.3 per cent as the market anticipated a new round in the drawn-out bid battle.

If an offer is forthcoming from Mr Reichmann it is expected in the new year. However, a third bidder is likely to emerge in the form of Brascan, the Canadian property and utilities group that owns the 10m sq ft World Financial Centre in lower Manhattan. It has the backing of Franklin Mutual, which owns 6.8 per cent of Canary Wharf, and of the investment bank UBS, which has 1.8 per cent. Brascan is considering a bid of about 255p-a-share.

The bidding war broke out in April after the company's shares fell to a low of 132.5p as the sector slumped and investors lost confidence in Canary Wharf's management.

Canary Wharf said on Thursday that an independent committee set up to consider bids would be willing to recommend the Morgan Stanley proposal, which is worth 265p-a-share. The shares rose 20.75p to 269.5p yesterday.

The committee, chaired by Sir Martin Jacomb, said it would work with Morgan Stanley with a view to announcing full terms and conditions as soon as practicable. Morgan Stanley's offer is supported by Simon Glick, another property tycoon, who owns 14.5 per cent of Canary Wharf.

Its offer is 220p in cash plus 45p in paper for each Canary Wharf share. The new equity will be issued by a new parent company for Canary Wharf which will be quoted on the Alternative Investment Market. There is a full cash alternative of 265p-a-share for investors who want to sell out.

Canary Wharf sold two properties to Royal Bank of Scotland for £1.1bn yesterday. Morgan Stanley is bidding through the Morgan Stanley Real Estate Fund IV.

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