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Canary Wharf's major shareholders back QIA battle for Songbird

Canary Wharf's major shareholders back QIA battle for Songbird
Photo Credit: Arabianeye-Reuters

The owner of the Canary Wharf office and retail development said on Wednesday that its largest shareholders had voiced support for a hostile bid for the company by Qatar’s sovereign wealth fund and Brookfield Property Partners.

 

With the show of support, Brookfield and the wealth fund, the Qatar Investment Authority - QIA, are likely to succeed in their bid to acquire Songbird Estates, which has a controlling stake in the Canary Wharf Group development. They made a final, all-cash offer last month for all of Songbird’s outstanding shares that valued the company at 2.6 billion pounds, or about $3.9 billion.

 

The Songbird board of directors said on Wednesday, as it has repeatedly, that the offer undervalued the company.

 

But with the support of the company’s largest shareholders, the Qatari fund and Brookfield will be able to control the composition of the company’s board, and the company’s governance will no longer be an “impediment to Q.I.A. and Brookfield proceeding with their offer,” Songbird said.

 

“The board recommends that, in the event that the offer becomes or is declared unconditional as to acceptances, shareholders should accept the offer,” Songbird said in a news release on Wednesday. “The directors who own Songbird shares in their personal capacity have decided that, in those circumstances, they will do the same in respect of their own holdings.”

 

The Qatar Investment Authority, Songbird’s biggest shareholder, and Brookfield first approached Songbird about a takeover in November. They increased their bid in December, offering to pay GPB3.50 a share for the company.

 

Songbird’s directors have said they estimate the company’s adjusted net asset value at GPB3.81 a share, and they have discouraged investors from accepting the offer.

 

Since the Qatari fund and Brookfield made their final offer on Dec. 4, the Songbird board has held discussions with a number of parties in hopes of receiving a higher, competing offer.

 

No other offer has emerged, and none is expected before Thursday, the first closing date for investors to accept the offer by the Qatari fund and Brookfield, the company said.

 

The Qatar Investment Authority and Brookfield already control significant stakes of Songbird and Canary Wharf Group, the operator of the complex.

 

They have received commitments for their December bid from several smaller investors, including Third Avenue Management, and now have added support from Songbird’s largest shareholders: the China Investment Corporation, China’s sovereign wealth fund; Morgan Stanley and the New York investor Simon Glick.

 

As a result, the Qatar Investment Authority and Brookfield will control 85.6% of Songbird’s existing shares, Songbird said.

 

If they acquire 90% or more of the company’s shares, they can seek to delist its stock and invoke “squeeze out” provisions that force the remaining shareholders to sell their shares, Songbird said.

 

The Canary Wharf development, built in a district once known for its docks, has 34 office buildings and nearly 700,000 square feet of retail space.