The Qatari sovereign wealth fund has upped its bid for Canary Wharf to 350p per share, after its earlier £2.2bn bid for Songbird Estates, its parent company, was rejected.
A joint venture between the Qatar Investment Authority and Brookfield Property Partners originally tabled a bid of 295p per share for Songbird in November, valuing it at £1.6bn, but Songbird chairman David Pritchard said the offer "materially undervalued" it.
But the new offer looks unlikely to meet Songbird's exacting standards: last month sources close to the deal told City A.M. that the company would only consider a deal "upwards of 400p per share", which would value the company at £2.25bn, about 25 per cent higher than the original offer.
At the time, analyst Peel Hunt said the offer was eight per cent below Songbird's net asset value as at June - but that was before Canary Wharf Group had been granted planning permission to build more than 3,000 homes on a 20-acre site next to its main estate.
The Qataris already own a 28.6 per cent share of Songbird, whose investment portfolio is worth £6.3bn. Brookfield, meanwhile, owns a 22 per cent stake in Canary Wharf Group, after it vied with Songbird for control of the company in 2004.
If a deal does go ahead, it will be the largest UK property deal in a decade. It will also make Canary Wharf, which currently has 8m sq ft of office space, with a development pipeline of 11m sq ft, the latest in a string of London's trophy assets owned by Qatar. In recent years, the state has become one of London's most enthusiastic property investors, buying up assets including Harrods, the Shard and Chelsea Barracks.
Shares were trading at 335.3p on the announcement.