Canary Wharf Group´s independent directors are expected on Thursday to recommend a ã1.76bn offer from an investment banking-backed group to acquire the company at 300p per share. The bid, from the real estate investment arms of Morgan Stanley and Goldman Sachs, is understood to be in the final stages of agreement. The offer price is higher than analysts´s original estimates, and is the best price for Canary Wharf shares in nearly a year.
However, advisers to the deal cautioned that Brascan, the Canadian group which has also made an offer, could trump the bid with a sweetener in the next few days.
Final negotiations with Morgan Stanley are expected to continue this week as the independent directors and their advisers try to squeeze out the best possible offer.
The two bidders are understood to be offering similar headline prices of 300p a share. However, the Morgan Stanley-led offer is understood to offer some advantages to investors in terms of its cash component and certainty of completion.
The independent directors committee, which includes some of the Docklands estate´s biggest shareholders, would like to recommend the highest cash offer possible. Both offers include an equity participation, to allow investors to remain shareholders in a privately-held Canary Wharf, and note alternatives that would let investors receive profits for future development either at the time of development or at the estimated current cash value of future development.
The cash being offered by Morgan Stanley Real Estate Fund is expected to be above Friday´s close of 271p. But shareholders, particularly arbitrageurs, may be disappointed at the size of the premium to Friday´s price.
MSREF and Goldman´s Whitehall Fund on Friday received the support of Paul Reichmann, executive shareholder of Canary Wharf, who owns 7 per cent of the company. Mr Reichmann joins Simon Glick, a New York-based investor who owns 14.5 per cent, in supporting the MSREF group, bringing the equity they can speak for to nearly 22 per cent.
In addition to wanting any offer to reflect what he considered fair value for the company he created, Mr Reichmann was also negotiating the value of warrants he received at the time of Canary´s IPO. He is understood to have reached agreement on the warrants.
Brascan owns just over 9 per cent of Canary Wharf´s shares and is still continuing its negotiations.
