Canary can't recommend a bid

AFTER five months of tortuous takeover talks, Canary Wharf admitted that it was unable to recommend a bid to its long-suffering shareholders.

The Docklands developer had hoped to have a recommended offer on the table by now, and has spent the past week in exclusive negotiations with a consortium fronted by investment bank Morgan Stanley.

But it said those talks had failed to produce backing from Canary's independent committee for Morgan's £1.49bn offer.

The main sticking point is the value of the new shares in a company Morgan proposes to create as Canary's parent. Other shareholders have already said they will block the Morgan bid.

'The independent committee is concerned that following representations from certain shareholders, this proposed offer may not provide a sufficient degree of certainty, although discussions continue,' Canary said.

The committee, chaired by Sir Martin Jacomb, has also rejected an increased cash offer from Canadian group Brascan, a 9% Canary shareholder. It said the offer was lower than the 255p a share Morgan-had bid and that talks with Brascan had ended. Brascan is thought to have bid 245p in cash.

'There can be no certainty that a recommended offer will be forthcoming,' Canary said. The shares fell 10 1/2p to 230p, wiping £61m from its market value.

The Morgan consortium, which includes Simon Glick, a 14.5% Canary shareholder, has offered 220p in cash and shares worth 35p in a proposed AIM-listed parent company for Canary.

Brascan has told Canary's committee that it would not pledge its stake to the Morgan bid. It is understood to have the support of several big US shareholders.

Together they speak for 20% of the company - nearly enough to block Morgan's offer.

Sources close to Canary founder and executive chairman Paul Reichmann, who has a 7.75% stake, say he will not support the Morgan offer. He has said he is interested in making his own bid.

There is no certainty that the Takeover Panel will allow the current Morgan bid to proceed.

Brascan has made an appeal to the panel - to be heard next week - requesting Glick's barring from the consortium. It claims his participation breaches strict rules governing equal treatment to all shareholders in a takeover.