Reichmann steps aside to assemble Canary bid

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Paul Reichmann "stepped aside" from the chairmanship of Canary Wharf yesterday to try to put together a bid for the property group.

Mr Reichmann, 73, said: "I am proposing to continue with the endeavours, which I have recently begun, to form a consortium with a view to its making an offer to the shareholders of the company at a level in excess of that reflected in the offers received so far."

The Canadian businessman has a 7.75 per cent shareholding in Canary Wharf. His move came as Brascan, the Canadian company that has had an offer rebuffed by the Canary Wharf board, signalled that it might go hostile. The third bidder, Morgan Stanley, was rejected yesterday at Canary Wharf's annual general meeting. Morgan Stanley is now "considering its position".

Mr Reichmann's relationship with Canary Wharf began in 1982, when he took over the scheme in London's Docklands from its original developer, a company called G Ware Travelstead, before anything was built. However, the scale of the building work and the bursting of the property bubble led to Mr Reichmann's Olympia & York company going bust in 1992. The banks took it over and in 1995 he bought it back from them, floating the company four years later. One private investor, Carl Roe, told The Independent after the AGM: "He [Mr Reichmann] will now get the company on the cheap for the third time."

Canary Wharf's committee of independent directors, led by Sir Martin Jacomb and formed to consider bids, disbanded yesterday on termination of the talks with Morgan Stanley. The US bank had offered 220p a share in cash, plus equity in a new vehicle that was said to be worth another 35p a share. The committee had already dismissed the Brascan approach. Sir Martin, who will temporarily be chairman, said: "We've done our job." However, although the takeover saga for Canary Wharf has been going on for five months, analysts said that it was only now properly kicking off.

Brascan disclosed it had offered 252p a share in cash in an improved offer this week. It said it will now "canvass Canary Wharf shareholders for their views on its proposals". The company will then decide on its next move. It is thought Brascan does not believe it was given a fair hearing from Canary Wharf's independent directors and so will take its case straight to shareholders.

The independent directors believed the Morgan Stanley offer was more attractive as it offered investors a continued stake in Canary Wharf - the property cycle is just beginning to turn up. Although Brascan did offer a part equity alternative, the committee did not believe this was a sufficiently developed element of its proposal.