Canary Wharf bidders revise their offers as battle draws to a close

The Canary Wharf bid battle entered its final phase last night with Morgan Stanley apparently ahead but with its rival, Brascan, claiming to offer more to those willing to take only shares.

The Takeover Panel set a deadline of 5pm yesterday to wrap up a bidding war that has run since last summer. Both bidders revised their offers just ahead of the deadline.

Morgan Stanley added 20p a share to take its offer to 295p a share or £1.7bn in cash, of which 57p is available in shares instead.

Crucially, the US bank also changed the structure of its offer so that it needs the acceptance of 50 per cent of shareholders. The previous terms required a demanding 75 per cent acceptance. Canary Wharf comes with £3bn of debt.

One analyst said: "I think Morgan Stanley has won. The Canary Wharf board will welcome the increase in the offer and the change of structure. The Brascan claimed bid value of 348p requires accepting an awful lot of subjective judgements of its value from them."

Brascan, a Canadian developer, maintained its cash offer at 275p. However, it offered Canary Wharf shareholders an alternative all-paper offer that it said was worth 348p a share. Brascan said it believed that a "significant portion" of Canary Wharf shareholders wanted an ongoing stake in the business and its offer was now specifically tailored to these investors.

Although Morgan Stanley's straight cash is seen likely to receive the recommendation of the Canary Wharf board, some industry sources said the Brascan position should not be dismissed. One insider added: "On the basis that anyone accepting a bid now - at the bottom of the cycle - would be giving away a whole lot of value, you cannot ignore an offer that provides you all that upside in shares."

Brascan can guarantee 18 per cent support for its bid, made up of its 9 per cent stake and the 9 per cent held by its ally, Paul Reichmann - Canary Wharf's founder and chairman. Even 18 per cent looked formidable when Morgan Stanley required 75 per cent support, but with a 50 per cent threshold now required, the in-built strength of Brascan's position has been eroded, analysts said.

The Canary Wharf board will consider the offers this weekend. An announcement is expected on Monday.