Reichmann could join in Canary Wharf fray

Bidders for Canary Wharf are expected to submit final offers this week for a takeover that could be worth £1.4bn, amid speculation that Paul Reichmann, executive chairman of the Docklands property company, could join the fray.

Potential bidders include Brascan, the Canadian property company that owns 9 per cent of Canary Wharf, Goldman Sachs´s Whitehall Funds and Morgan Stanley Real Estate Funds.

Mr Reichmann is believed to be seeking finance to make a bid if other offers fall short of a certain level. His offer could be in the 310p- 350p per share range, straddling the price at which Canary Wharf came to market in 1999.

If the CWG board´s independent committee decides the bids undervalue the company, it might ask the bidders to resubmit offers or could withdraw the process.

The bids come as a new source of potential demand from government departments for space at Canary Wharf has emerged.

A review just completed for the Home Office, traditionally an occupier of space in London´s West End, has suggested expanding into areas such as Southwark and Canary Wharf to cut occupancy costs in half.

The report, prepared by the Home Office´s consultants, Donaldsons, is a blow to the West End office market where government departments are one of the few occupiers seeking large office blocks.

Canary Wharf has had limited success in luring government departments, although the Financial Services Authority is a key tenant. Government leases on the estate have been used to back Canary Wharf securitisations of its property assets, which have helped it cut borrowing costs.

CWG is building a speculative tower that has 400,000 sq ft available to let, sufficient for Home Office requirements.

If Canary Wharf is taken private, it would be the latest UK listed property company to do so. Some 12 property companies have gone private in the last few years.

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