The joint bid by Qatar and Brookfield to win control of Canary Wharf is close to collapse, The Independent understands.
The Qatar Investment Authority (QIA) and the Canadian property investor made a lowball 295p-a-share, £2.2bn approach to win full control of Songbird Estates earlier this month, which was quickly rejected.
Qatar already owns 28.6 per cent of Songbird, which is itself a 69 per cent shareholder in the developer Canary Wharf Group, but has until next Thursday to make a firm offer.
Songbird yesterday claimed that its value has swollen by almost £500m in just five months – giving it a net asset value of 381p a share – as a result of a booming London property market, planning permission for its Wood Wharf development in London Docklands and big lettings to banks such as Société Générale. But it is understood that the bidders are focusing on a much lower “triple net asset value” measure, focusing on the break-up value of the business after debts and tax liabilities are paid off . This puts a much lower 303p price tag on Songbird. Sources said they were unlikely to raise their offer before the Takeover Panel’s deadline. The QIA declined to comment.
Lazarus analyst Matthew Saperia said it was fairer to focus on net asset value than the bidders’ preferred measure as “we don’t believe their interest is motivated by a break-up of the estate”.
But Songbird also said there was “substantial” additional value to come from its other pipeline projects, such as the overhaul of the Shell Centre on the South Bank in London, and the future benefits from the arrival of Crossrail at Canary Wharf in 2018. Miranda Cockburn, an analyst at Oriel, said: “Hopefully this information will provide the QIA and Brookfield with some guidance as to a more sensible offer level – if indeed they want to make an offer now.”
Canary Wharf Group has built more than 16 million sq ft of office space in Docklands over the past 25 years, and still owns around half of it.
It is also a player in the City property market, having developed the Walkie-Talkie skyscraper in tandem with the UK’s biggest property company, Land Securities.
The QIA counts Harrods among its high-profile assets in London. It became a major shareholder in 2009 as part of a bailout for Canary Wharf Group, which came close to collapse amid plunging commercial property values. The joint venture would have to buy out other stakeholders including the US investor Simon Glick, Morgan Stanley and China Investment Corporation. Mr Glick’s Glick Entities owns 25.9 per cent, the CIC 15.8 per cent and Morgan Stanley 8.5 per cent. One senior property source said: “Glick is the key to this. I know him well; he’s no fool and he’s in it for the long haul.”
Brookfield already owns most of the 30.6 per cent of Canary Wharf that Songbird does not control – the legacy of a 2004 takeover battle. Shares in Songbird ended up 4.75p at 354.75p.