Fonte/Source, Wall Street Journal, Years of conjecture over the sale of London’s skyscraper-studded Canary Wharf business district appear to be over.
The Qatar Investment Authority and Canadian firm Brookfield Property Partners LP are poised to gain control of Canary Wharf’s majority shareholder, Songbird Estates PLC, in a £2.6 billion ($3.95 billion) hostile takeover. That would add to Qatar’s burgeoning London portfolio and hand Brookfield a belated victory in a takeover battle that dates back a decade.
The path to what would be the U.K.’s biggest real-estate deal was cleared when Songbird, which owns 69% of Canary Wharf Group, said Wednesday that three major shareholders had decided to back the bid. That move promises to settle a standoff between Songbird’s board and the bidders, and could result in the company leaving the London Stock Exchange .
Songbird surprised analysts with Wednesday’s announcement that the three major shareholders—U.S. investor Simon Glick, China Investment Corp. and Morgan Stanley —were ready to accept the bid. Together with QIA, Qatar’s sovereign-wealth fund, they own almost 80% of Songbird, and the bidders needed the support of at least one of the three.
If just one of the three agreed, it would have meant that the other two faced the prospect of remaining minority interests in a company dominated by QIA, with little likelihood of selling their stakes on favorable terms, people familiar with the negotiations said.
With global investors increasingly allocating capital to property, London’s real estate is popular because of the country’s stable currency, a legal system that tends to side with property owners, and ample liquidity boosted by consistent demand.
Qatar has been a prominent buyer of London’s landmarks over the past decade. It bought the London headquarters of HSBC Holdings PLC, Canary Wharf’s largest building, for more than £1.1 billion in December. It also owns the Shard, the Harrods department store, Chelsea Barracks, and the 2012 Olympic Village—as well as a 29% stake in Songbird.
Canadian investors including Brookfield have also been busy in the past 12 months, pouring $1.9 billion into London real estate, about as much as Qatar, according to Real Capital Analytics.
QIA and Brookfield first approached Songbird in November with a bid of 295 pence per share. Songbird responded by publishing an independent valuation that gave the shares a price tag of 381 pence based on the value of Canary Wharf’s pipeline of new office and residential developments. The bid was later sweetened.
Songbird shares gained 7.8% Wednesday to trade at 346.50 pence, around one-third higher than where they were before QIA and Brookfield disclosed their approach.
James Carswell, an analyst at Peel Hunt, said the big shareholders have seized a rare opportunity to cash out, because the small pool of publicly available Songbird shares has made them difficult to trade.
“Shares have traded at a discount to net asset value, liquidity has been poor and this is your opportunity to get out at a price way in excess of where shares have been trading,” Mr. Carswell said.
The deadline for other shareholders to register their support for the bid is 1300 GMT on Thursday. Three small institutions—EMS Capital LP, Madison International Realty and Third Avenue Management LLC—have already announced their intention to accept the offer.
Songbird, originally set up as a listed buyout vehicle, gained control of Canary Wharf in 2004 after beating out rival bidder Brascan, a Canadian investor that later became Brookfield Asset Management Inc. Brookfield never relinquished the stake it had built in Canary Wharf Group.