Morgan Stanley tops Brascan with £1.6bn Canary Wharf bid

The bid battle for Canary Wharf intensified yesterday, with both of the parties interested in the group submitting takeover offers.

A day of drama in the long-running bid battle for the property group, which owns the eponymous Docklands office development, first witnessed a bid from Brascan, followed by an improved offer from Morgan Stanley.

Brascan, a Canadian developer, offered 270p a share or £1.58bn, beating a recommended 265p-a-share bid from the consortium led by Morgan Stanley.

That sent the independent directors of Canary Wharf into a hurried meeting. The directors then received an improved offer from Morgan Stanley, worth 275p a share, and decided to keep their recommendation with the US bank. That was announced just before 2pm.

By 5pm, Brascan had its response out, insisting that the Morgan Stanley bid was doomed because, as a scheme of arrangement, it needed 75 per cent of shareholders to back it.

Brascan has teamed up with Canary Wharf's founder and chairman, Paul Reichmann. Brasan's 9 per cent holding will not be voted in favour of the Morgan Stanley offer, nor will Mr Reichmann's 9 per cent stake.

Given that the Glick family's 14.5 per cent holding is not eligible to vote in the contest, Morgan Stanley "requires approximately 95 per cent of the remaining Canary Wharf shares eligible" to vote in its favour. That is all but impossible, according to Brascan, which said that only its proposal "has a realistic opportunity of being implemented".

The bid saga, which has been running since spring last year, still appeared to have some way to run, analysts said. Canary Wharf shares closed at 276.75p, as the market bet that Morgan Stanley's 275p offer was not good enough to win.

Key to any vote is a 6.9 per cent stake held by US fund Franklin Mutual, which has said that it would vote against the Morgan Stanley offer.