QIA - Brookfield Property raise bid for Songbird Estates to £2.6 bn
05 December 2014
Qatar Investment Authority (QIA) and Brookfield Property Partners yesterday raised their bid for London's prestigious Canary Wharf owner Songbird Estates to £2.6 billion ($4.07 billion).
Qatar's sovereign wealth fund QIA and Brookfield, which saw their 295p-a-share or £2.18-billion ($3.45 billion) cash takeover offer rejected last month by Songbird Estates, (See: Canary Wharf majority owner Songbird rejects QIA - Brookfield's £2.18 bn bid) have now revised their offer to 350p-a-share, valuing the London-based property group at £2.6 billion.
The revised offer was submitted two hours before the 5:00pm deadline of the UK Takeover Panel rules, as the consortium would have been obliged to walk away from making a fresh bid for six months.
QIA and Brookfield said that their revised cash offer is final, which means that they cannot raise it any further under the takeover rules.
The consortium said that its offer has an "attractive premium" of 41.6 per cent to the six month weighted average price of Songbird's stock before its initial offer tabled on 5 November.
"With this offer, we are seeking to simplify the ownership and governance structure of Songbird, and ultimately also Canary Wharf Group. The final offer price represents a significant premium to Songbird's fundamental value and to the pre-approach share price even following a significant increase in the reported valuation and the share price of Songbird over the last 12 months," said a spokesman for the QIA.
But the revised 350p-a-share offer is still below the 381 pence a share valued late last month by Songbird's independent valuers. (See: Canary Wharf owner Songbird says its valuation of £2.82 bn exceeds QIA - Brookfield takeover price)
After rejecting the consortium's offer, Songbird informed its shareholders that it had asked its independent valuers' to prepare an up-to-date valuation of the group's portfolio. The revaluation, along with an improvement in the London property investment market and developments in the Canary Wharf Estate, raised Songbird's adjusted net asset value (NAV) by 19.2 per cent since 30 June to 381 pence a share on 27 November, up from 319 pence per share on 30 June 2014.
Songbird is the single-largest stakeholder in the Canary Wharf business district with a 69.3-per cent stake, while Brookfield is the second-largest with 22 per cent, while the rest is free float.
The consortium said that its latest offer has the support of hedge fund Third Avenue Management, which owns 3.5 per cent of Songbird's shares, equivalent to 16 per cent of free float.
Songbird, which is partially-listed on the stock market, is 28.6-per cent held by QIA, while New York investor Simon Glick, holds 25.07 per cent, China Investment Corporation 15.8 per cent, Morgan Stanley 8.53 per cent and US fund Third Avenue Management 3.2 per cent.
Apart from Canary Wharf, Songbird also holds stakes in the landmark "Walkie Talkie" skyscraper in the City and in the Shell Centre.
Songbird's prized asset is the Canary Wharf, which until 1961 was one of the world's busiest docks serving huge industrial areas of east London and beyond. But with Britain losing its industrial preeminence, much of the docks were lying idle till the Canary Wharf Group started developing the area in 1995.
The 97-acre Canary Wharf area boasts tall skyscrapers and officially employs over 100,000 people in 34 office buildings, over 280 shops, cafés, bars and restaurants. It has become a shopping destination, particularly with the opening of the Jubilee Place shopping centre in 2004.
The Canary Wharf financial district today rivals London's traditional financial centre, The Square Mile and holds three of the tallest buildings in the UK - One Canada Square, known as the Canary Wharf Tower, 8 Canada Square and the Citigroup Centre.
Leading banking groups like HSBC, Credit Suisse and Barclays; media and service firms, including Thomson Reuters and Trinity Mirror have their office in Canary Wharf.
QIA is one of London's biggest landmark property owners, holding stakes in London's tallest building The Shard, Chelsea Barracks, luxury department store Harrods earlier owned by Mohamed al-Fayed, and the former Olympic Village in Stratford East London.
Last month it agreed to buy HSBC's global headquarters in Canary Wharf for £1.1 billion
It also holds stakes in British bank Barclays Plc, London-listed miner Glencore International and Credit Suisse's headquarters in London.