Canary takeover battle hots up

THE three-way bid battle for Canary Wharf took a dramatic twist today after founder Paul Reichmann added nearly £100m to the price tag in a move that could scupper a rival bid led by Morgan Stanley.

Reichmann and rival suitor Brascan Corporation, the Canadian property developer, said today they had teamed up to sink a £1.55bn offer for the prestigious Docklands estate from a consortium led by Morgan Stanley Real Estate Funds (MSREF).

The Reichmann-Brascan alliance has signed up major Canary shareholder Franklin Mutual Advisers in a shareholder pact that has enough votes to block the Morgan-led bid. 'The MSREF bid will not succeed,' Brascan said in a statement today.

Reichmann, an 8.9% Canary shareholder, said he was working on an offer for Canary Wharf which could come as high as 280p per share in cash, or £1.65bn with a cut-off date of 31 January. Brascan, with 9% of Canary, said it would vote in favour of any Reichmann offer.

Should this not materialise by the end of January, Brascan said it would make its own offer of 267p a share, or £1.55bn, which Reichmann would back provided it came though by 13 February.

This would be 2p per share more than the Morgan led bid recommended by Canary's independent directors. A date has yet to be set for shareholders to vote on the offer.