Qatar Investment Authority (QIA) and Brookfield Property Partners are close to tabling a higher takeover bid for Canary Wharf Group’s parent company, Songbird Estates, after their earlier £2.2bn offer was rejected.
Songbird’s chairman David Pritchard rejected an initial approach 10 days ago, saying the 295-pence-a-share offer significantly undervalued the group.
QIA, the sovereign wealth fund which owns 28.6 per cent stake in Aim-listed Songbird, and Brookfield are expected to return with a higher offer this week.
Analysts believe the pair would need to up their offer to at least 350 per share or higher to impress shareholders, which include New York-based investor Simon Glick, China Investment Corp.
Peel Hunt said the initial offer was eight per cent below Songbird’s net asset value as at June, which was before Canary Wharf Group achieved revised planning permission to convert a huge 20-acre site next to its east London estate into more than 3,000 homes.
A takeover of Songbird would help simplify its complicated ownership structure. Originally set up as a buyout vehicle, Songbird gained control of Canary Wharf in 2004 after seeing off rival bidder Brascan, a Canadian investor now known as Brookfield.
US–listed Brookfield retained the stake it had built up in the group and currently holds 22 per cent. Franklin Rescources owns the remaining seven per cent.
QIA is being advised by Barclays and Citigroup, and HSBC is acting for Brookfield.