Canary Wharf majority owner Songbird rejects QIA - Brookfield’s £2.18 bn bid

Songbird Estates Plc, majority owner of London's prestigious Canary Wharf estate, today rejected a proposed £2.18 billion ($3.45 billion) takeover bid from Qatar Investment Authority (QIA) and Brookfield Property Partners LP saying that it significantly undervalues the company.

Songbird, which yesterday said that it had been approached by QIA and Brookfield, today said that it has reviewed the 295-pence a share proposal, and its board unanimously concluded that it should be rejected.

''This proposal significantly undervalues Songbird and does not reflect the inherent value of the business and its underlying assets,'' said David Pritchard, chairman of Songbird.

The stock price of Songbird, which is partially listed on the stock market, shot up yesterday evening by 23 per cent to 320 pence after the real estate company confirmed media reports that QIA and Brookfield could table a joint bid. (See: Qatar Investment Authority seeks control of Canary Wharf owner Songbird Estates)

Songbird currently has a market cap of £2.3 billion, but a recent revaluations of the company's assets valued it in excess of £6.28 billion.

It is highly likely that the other shareholders would agree with the rejection, as they may not want to part with their stake. Apart from Qatar Investment Authority with 28.6-per cent stake in Songbird, these shareholders include New York investor Simon Glick, who owns 25.07 per cent, China Investment Corporation with 15.8 per cent, Morgan Stanley 8.53 per cent and US fund Third Avenue Management 3.2 per cent.

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.

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 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.