Canary Wharf saga ends with Morgan Stanley win

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The Independent Online

Morgan Stanley emerged triumphant last night in the battle to buy Canary Wharf to end one of Britain's longest and hardest-fought takeover battles in recent years.

Morgan Stanley emerged triumphant last night in the battle to buy Canary Wharf to end one of Britain's longest and hardest-fought takeover battles in recent years.

The £1.7bn offer from a consortium led by the US bank secured enough shareholder support to beat a rival offer from the Canadian developer Brascan.

The deal gives Morgan Stanley control of Canary Wharf's vast office and retail complex in London's Docklands. The development, led by the Canadian lawyer Paul Reichmann, started in the 1980s as a key regeneration project in Thatcher's Britain, turning derelict east London dockyards into the city's second financial district.

It now houses the European headquarters of many giant global investment banks, including CSFB, Morgan Stanley, HSBC and Citigroup. The City of London, the traditional finance centre, was not able to offer the size of buildings available at Canary Wharf to house the huge trading floors required by these banks.

Morgan Stanley bank had swooped on Canary Wharf almost a year ago, at a low point in its history, as the health of its tenants in the financial services industry was being questioned. To the alarm of the City, Canary Wharf disclosed that some of its tenants that had signed long leases had the right to return part of their space to the company, if it was no longer required.

Morgan Stanley's bid vehicle, Songbird, said yesterday that it had won the support of investors owning 60.9 per cent of Canary Wharf. Songbird and its rival bidder Canadian conglomerate Brascan needed more than 50 per cent of shareholder votes to win the owner of Britain's tallest building.

The two suitors had been wrestling for control of Canary Wharf since June last year.

The Canary Wharf board had recommended Morgan Stanley's offer, which in cash terms is pitched at 295p-a-share against Brascan's 275p-a-share offer.

The battle split Canary Wharf's biggest shareholders, with Songbird enjoying the backing of its largest investor, the US entrepreneur Simon Glick, while Brascan, one of Manhattan's biggest landlords, had the support of the former Canary Wharf chairman Paul Reichmann.

Before throwing his weight behind Brascan, Mr Reichmann had tried unsuccessfully to raise enough money to buy Canary Wharf himself.

In 1992, a slump in the global property market pushed Canary Wharf into administration. In 1995, it was sold to an international consortium that included Mr Reichmann, Franklin Mutual Series Fund and Saudi Prince Al Waleed bin Talal. It was later floated on the London stock market.

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