Last minute dissent over Canary Wharf bid

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The Independent Online

The board of Canary Wharf was yesterday insisting that Morgan Stanley's £1.7bn agreed bid for the company will succeed, despite eleventh hour rumblings of dissent from major shareholders.

The year-long bid battle for the London Docklands property group had been expected to draw to a close later this month, but some institutional investors, thought to include Scottish Widows, Franklin and Hermes, are trying to scupper the deal. These three fund managers together own 13 per cent of Canary Wharf and are thought to want the Morgan Stanley bid to lapse. The deadline for shareholders to accept the bid is 21 May.

The dissidents are believed to have discussed the issue in recent days and are arguing that Canary Wharf is being sold on the cheap at the bottom of the property cycle.

A spokeswoman for the independent committee of the board, led by Sir Martin Jacomb, yesterday said it was still comfortable with recommending the Morgan Stanley offer and it was hopeful that it would secure the support of the needed 50 per cent of shareholders.

"The committee has had a constant dialogue with shareholders throughout this bid process. It has recommended the Morgan Stanley bid and still believes it to be in the best interests of shareholders," the spokeswoman said.

Morgan Stanley, through its Songbird bid vehicle, finally secured the board's recommendation last month after raising its offer by 20p a share to 295p in cash. Franklin and Hermes, however, are both known to have supported the rival bid from Brascan, the Canadian developer. Its offer included a 275p cash component but gave shareholders a higher equity content, making a total of 348p a share, in an attempt to lure shareholders who wanted to continue their stake in the business.

There are thought to be shareholders unwilling to take the cash offered by either bid and want to remain as long-term equity holders. Some shareholders have been reluctant to give up the possibility of further upside on the stock as the financial services industry emerges from recession and demand for office property increases.

Brascan and Paul Reichmann, Canary Wharf's founder and former chairman, are also set to vote against the Morgan Stanley offer. They each control about 9 per cent of Canary Wharf's shares.

Shares in the company have stabilised at about 294p, indicating the market believes the Morgan Stanley deal will go through.

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