Reichmann fails to stop Canary Wharf sale

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Paul Reichmann, the property tycoon, was back in the spotlight yesterday in the drawn-out bid battle for Canary Wharf, as the company's shareholders voted through a disputed asset sale worth £1.1bn.

Shareholders will now wait to see if Mr Reichmann is true to his word and mounts a takeover bid for the property company he founded in the 1980s.

Mr Reichmann, along with Brascan, another large Canary Wharf shareholder, opposed yesterday's property sale, claiming it was not in the company's best interests. Although Mr Reichmann, Brascan and Franklin Mutual Advisors, a third institution, voted in opposition, 69.4 per cent were in favour of the disposals.

The sales were a key condition of a £1.56bn recommended offer for the company from a Morgan Stanley real estate fund. Mr Reichmann's own investment vehicle, IPC Advisors, last week outlined a rival proposal, which would offer 275p a share for the company. The deal, if it is made official, would trump Morgan Stanley's bid which is worth 265p a share.

However, Sir Martin Jacomb, the chairman of Canary Wharf's independent directors who are assessing bids for the company, cautioned shareholders that neither bid might actually materialise.

Mr Reichmann has told shareholders he has set the end of January as the deadline for his investment vehicle, which controls 8.9 per cent of Canary Wharf's shares, to come up with an offer for the company. If he does produce a bid then Brascan, which owns 9 per cent, has pledged to support him. However, if Mr Reichmann fails to make an offer then Brascan has said it will try to mount a bid of its own, at 267p a share, by February 13. Mr Reichmann has said he will in turn support Brascan's offer.

If neither Mr Reichmann nor Brascan eventually comes up with an offer, then Canary Wharf hopes to be able to put a vote to shareholders on Morgan Stanley's offer soon after February 13. Analysts believe that Mr Reichmann would not have tried to derail the Morgan Stanley bid unless he was confident of mounting a bid of his own.

Some Canary Wharf directors have complained about Mr Reichmann's behaviour. Two months ago, before he stepped down from the Canary Wharf board, Mr Reichmann backed the disputed asset disposals only to change his mind last week. However, it is unlikely any action will be taken against him by the company.

Canary Wharf needs to gain a 75 per cent majority to see the Morgan Stanley offer through. At the moment, known opponents to the bid account for 24.7 per cent of the shares.

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