Canary bids are too cheap

SIR Martin Jacomb is a veteran of boardroom strife. He was the point man during the Richard Greenbury succession struggle at Marks & Spencer.

He found himself in the chair at the Prudential in the unsettled period after the departure of Mick Newmarch and the arrival of Sir Peter Davis. He was at Barclays during the turmoil at BZW.

Whether these experiences at the top level of corporate Britain have really prepared the Old Etonian for the role he is now having to play at Canary Wharf must be doubtful.

Jacomb, 74, finds himself holding the ring amid a cast of characters who would not have been out of place in Tom Wolfe's epic Wall Street novel Bonfire of the Vanities.

It is not yet clear that Jacomb has covered himself in glory. The alacrity with which the Canary Wharf board latched onto the £1.56bn bid from bankers Morgan Stanley was misplaced.

Sure, Jacomb and company no doubt find it more pleasant to deal with a respected Wall Street house rather than the motley crew - including founder chairman Paul Reichmann - who have been circling Canary Wharf.

But in so doing and paying hefty break fees to Morgan Stanley, the board appears to have fallen into the Debenhams trap.

Debs and their advisers would argue that they played a blinder. By stringing along the original bidders Permira and opening the books to them, they attracted an alternative bidder to the honeypot.

The directors' duty is to get the best price, not to accept the first firm bid that comes along. The instincts should be to reject and fight, not to give in to the smell of cash.

If there is a redeeming feature in the MS bid, it is the possibility of enjoying equity uplift when a new Aim vehicle is quoted - after the public-to-private transformation.

But why should investors want this inferior vehicle when they can enjoy all the value with the present shares?

This is particularly true at Canary Wharf at a time when it is accepted that the property market has good recovery prospects. The financial sector is improving, and there is the possibility of converting into a more tax-efficient real estate investment trust when Gordon Brown gets his act together.

There is no requirement that says you have to accept a bid just because it is there.

This is not to say rejecting Morgan Stanley should clear the way for the antics of Paul Reichmann, Brascan and pals who joined forces for yesterday's egm to try to block the sale of two buildings to the Royal Bank of Scotland for £1.1bn.

Yet it was Reichmann who chaired the meeting at which the buildings were originally put up for sale.

It could still be that the foes of the Morgan Stanley offer have enough firepower to block a scheme of arrangement, which requires 75% of the votes cast to become effective. That may be no bad thing given that the MS offer is below where it should be.

What shareholders now need is a new stronger, independent board that can stand up to the raiders and run Canary Wharf in the interests of all investors - not just those with big stakes who still view the company as their plaything.

Italian job

ITALY could have done without the Parmalat scandal. It too easily plays into the stereotype of the Italian company with at least two sets of accounts - one for the owners of the business and one for the taxman.

What is remarkable about Parmalat is that the company is based in prosperous northern Italy and was considered a good enough banking risk to have some of the grandest names on the financial scene beating a path to its door to assist its global takeover spree.

The revelation of an Enron style hole of at least £2.3bn has investigators from around the world working feverishly to understand where the money has gone.

The company's founder Calisto Tanzi and two chief financial officers are under investigation.

Spillover in Britain could be considerable given the role of British-based auditors Grant Thornton and paperwork leading to the Cayman Islands, one of those British overseas territories that lives off its role as an offshore financial centre.

Remarkably on this occasion British banking exposure seems confined to Royal Bank of Scotland, with American and Italian banks facing the great bulk of losses. Connoisseurs of milk products will be anxious to ensure that the upmarket British Loseley yoghurt brand finds a safe harbour.

It will not be a very festive Christmas for the Italian finance community as it looks into the abyss.