QIA and Brookfield Canary Wharf bid wins over second shareholder

QIA and Brookfield’s attempt to takeover Canary Wharf Group has won support from a second major shareholder but is not, for now, enough to prompt a sale.

Madison International Realty has accepted the duo’s offer of 350p per share made last Thursday for its 2.5% in Songbird Estates, the listed vehicle which owns 69.37% of Canary Wharf Group.

Songbird’s board however has rejected the bid, which it said “believes the offer from QIA and Brookfield does not reflect the full value of the company, its unique position and future growth potential.”

Madison is the second notable shareholder to support the bid, Third Avenue Management which owns 3.5% of Songbird having shown its hand last week. The pair’s support is not enough to force a takeover but does show that the price offered is seen by some as fair value.

In order to gain control of Songbird, QIA and Brookfield would need to convince other major shareholders – either Simon Glick, CIC or Morgan Stanley – to sell. They own 25.9%, 15.8% and 8.5% of the company respectively. QIA owns 28.6% of Songbird whilst Brookfield owns 22.08% of the 30.63% of Canary Wharf Group not owned by Songbird.

Brookfield and QIA are aiming to simplify Canary Wharf Group’s complex structure, as well as exercise more control over the company. Despite its large stake, Brookfield does not have a seat on the board of Canary Wharf Group following an unsuccessful takeover attempt in 2004.

The current bid made on the final day of the offer period is an advance on the 295p initial approach, first revealed by Real Estate Capital, on 6 November. Because their 350p bid is a final offer, Brookfield and QIA cannot come back to the table for another six months.

On 28 November Songbird adjusted its net asset value to 381p per share, a 19.2% rise over a five month period, “in order to provide updated information to shareholders” and reflect “both the continued improvement in the London investment property market since [its previous valuation in June] and the significant progress achieved within the Canary Wharf Estate”.