Canary Wharf set to reject offers

Canary Wharf is reportedly set to terminate negotiations with potential buyers, after several indicative offers were considered to have undervalued the group. The group’s directors are believed to have set a deadline for the bidders â€" the Brascan Corporation and a consortium led by Morgan Stanley and Goldman Sachs â€" for the middle of next week.

The bidders appeared last night to be about 50p per share apart on share price, and sources close to Canary Wharf said they did not expect the gap to close. Although no offers have been made public, Morgan Stanley and Goldman Sachs are understood to have offered about 250p per share, while Brascan’s offer is thought to be in the 240p to 260p range.

Canary Wharf’s board is holding out for a price closer to 300p per share. It is understood that the board has decided it would rather remain a public company rather than accept an offer in this range. Unless either bidder increases it offer in the next few days, the approaches will be rejected, with a formal announcement made as early as next week.

If Canary Wharf chooses to remain a listed company, it is expected to sell off around £800m of first-generation buildings on the estate, and use the proceeds to restart its programme of returning capital to shareholders.

Institutional shareholders in Canary Wharf said yesterday that although they were disappointed that bidders were not considering a higher price, they indicated that they would prefer the company to remain listed rather than accept a low offer.

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