Qataris win battle for Canary Wharf

Qatar’s sovereign wealth fund has claimed victory in its long-running £2.6bn bid battle to seize control of Canary Wharf after an 11th-hour change of heart from a group of major shareholders.

Songbird Estates, the majority owner of the Canary Wharf Group, on Wednesday surprised the market by reluctantly revealing that its three major shareholders had decided to back a 350p-a-share hostile bid from the Qatar Investment Authority (QIA) and Canada’s Brookfield.

The volte face follows almost three months of wrangling over the future of Songbird, which owns a 69.3pc stake in Canary Wharf Group.

Following a considerable stand-off, Songbird’s bankers had attempted to drum up a competing bid from rival sovereign wealth funds in order to skewer the bid.

But after those attempts failed, New York-based diamond magnate Simon Glick, who owns 25.9pc of Songbird, China Investment Corporation, which owns 15.8pc, and US bank Morgan Stanley, with 8.5pc, yesterday backed the bid after previoulsy having been said to be unethused about the offer.

Sources said that it was impressed upon the major shareholders that there was no real alternative bidder after Songbird Estates’ bidders had serious discussions with a clutch of rival Asian sovereign wealth funds.

“Not many people would want to challenge Qatar in a bidding war”, a source said, pointing to the likely share price fall were the QIA and Brookfield to walk away.

As a result of the major shareholders’ support for the offer and Qatar’s existing 28.6pc stake in Songbird, some 85.6pc of Songbird’s investors now back the bid, making the takeover a near certainty.

Should QIA and Brookfield win over enough of the remaining Songbird shareholders to take that support to 90pc, they can forcibly squeeze-out the remaining 10pc under a compulsory purchase arrangement and delist the company from the London Stock Exchange’s junior Aim market.

As a result of the change of allegiances, Songbird’s board switched its recommendation and advised minority shareholders to accept the offer.

At several points during the takeover tussle the bidding duo’s fate hung in the balance as they required at least one of the major shareholders to back the offer to achieve the minimum 50pc level of support necessary.

Songbird had attempted to dismiss the overtures of the pair by hiking its valuation by over a third with a re-evalution of its net asset value to 381p in late November in a move the company said reflected the rise in commercial property values and the potential to develop its residential Docklands complex, Wood Wharf.

The company also published a robust defence document which stressed the gap between the bid and the potential value of the company. Despite having lost the battle, Songbird 's board maintained yesterday that the bid “does not reflect the full value of the business”.

City analysts seemed shocked by the turn in developments. “This is a surprise announcement to us because in our view the response circular gave a thorough and detailed rationale as to why the offer did not reflect the full value of the company”, said analysts at Oriel. “Howeve...it was always going to be difficult to second-guess the outcome”.

A successful takeover of Songbird will pave the way for the complete privatisation of the Canary Wharf Estate, which is jointly owned by Songbird, Canadian investment firm Brookfield and the US investment firm Franklin. The triumph will bulk up Qatar’s already burgeoning portfolio of London real estate, which includes the Shard, Chelsea Barracks, Harrods and the Olympic Village in east London.

Shareholders have until 1pm on Thursday 29 January to accept the offer.