Wharf bosses unaware of Morgan fee

CANARY Wharf 's executive directors were unaware they are being hit with a £2m fee from a bidding consortium for a rejected takeover proposal, it was claimed on Thursday. A consortium led by investment bank Morgan Stanley, a major tenant in Canary Wharf's Docklands estate, struck a controversial 'pre-announcement break fee' with the rest of the company's directors, insiders said.

The payment would have been agreed by Canary Wharf, founded and chaired by Paul Reichmann, in the expectation that Morgan's £1.5bn indicative offer would result in a recommendation from the board to shareholders.

Sources close to Canary Wharf chief executive George Iacobescu and finance director Peter Anderson said they were convinced that there was no such fee.

This type of break fee should have been struck with Canary's independent committee of directors, headed by Sir Martin Jacomb, which has been handling the auction of the Docklands developer for the past five months. 'A company never does it unless it wants to make a recommendation. You have to be ready and willing to make an offer to get this sort of fee,' said one insider.

The existence of the fee and Wednesday's sudden rejection of Morgan by Canary's independent committee, 10 days after they entered exclusive bid talks, has fuelled speculation that there had been untoward pressure from Reichmann, which the company strongly denied.

Jacomb said his directors had acted with integrity and impartially. Reichmann announced at Wednesday's annual meeting that he was temporarily stepping down as chairman to pursue his own takeover.

Had the Morgan-led consortium been recommended, it would have secured an addition £15m break-fee, 1% of the value of its offer.