JEDDAH, 20 April 2004 — Top Saudi businessman Prince Alwaleed ibn Talal and a consortium led by bankers Morgan Stanley last night appeared to have won a 10-month takeover battle for London’s prestigious financial center Canary Wharf. The board of Canary Wharf Group PLC, yesterday backed a 1.7 billion-pound ($3.1 billion) cash offer from the Morgan Stanley-led company, Songbird, over a lower one by Canada’s Brascan Corp. The Canadian group included Paul Reichmann who built the project in the late 1980s. The decision to accept the offer came after Morgan Stanley increased its offer on Friday for the second time in three days, offering 295 pence a share — amounting to 1.7 billion pounds — compared with a bid two days earlier of 292.5 pence.
With Brascan deciding to leave its cash bid at 275 pence a share unchanged although increasing its alternative stock offer, the contest was effectively over. Brascan said that its offer was worth 348 pence a share. Cash rather than equity is what the sellers wanted. The takeover battle was one of the longest-running in the UK for recent years.
The 86-acre office and retail complex built on derelict land in east London, was the largest single office development in the world when it was built, and a symbol of Margaret Thatcher’s free-enterprise Britain. However, with the recession at the end of the 1980s, its developers — Olympia and York, owned by the Reichmann family — went bankrupt, leaving the just finished buildings largely empty. In the 1990s, however, major UK newspapers including the Daily Telegraph, the Independent, the Daily Mirror as well as Reuters moved in, making it the single most important media center in London if not the world, as did banks, including Citigroup and Barclays; HSBC have their international headquarters there. There is an expectation that Canary Wharf will become even more active as companies such as Citigroup and HSBC hire extra employees after posting record earnings.
Prince Alwaleed is reportedly contributing about 70 million pounds of stock and cash in exchange for about 8 percent of the company.
“The consortium’s offer has my full backing,” the prince said in a statement.
The Songbird consortium also includes New York diamond magnate Simon Glick, as well as the billionaire Tisch family also from New York and British Land Co., the second-largest UK real estate company.
Investors still have until May 7 to decide which offer to back under a timetable laid down by the UK Takeover Panel, but that is now seen to be a technicality, unless Brascan can raise some more cash.
Shares in Canary Wharf closed down 2 pence, or 0.7 percent, at 293 pence in London yesterday. They have risen more than 60 percent since the company said it had been approached by a potential buyer in June last year.