Morgan clears Canary Wharf hurdle
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New Year's fireworks light up Canary Wharf Tower in London.
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LONDON, England (Reuters) -- Shareholders of British property firm Canary Wharf removed one obstacle to a £1.56 billion ($2.8 billion) takeover by Morgan Stanley on Monday by backing the sale of two buildings.
But the U.S. investment bank still faces the difficult hurdle of getting 75 percent of investors to support its recommended 265 pence per share offer for the firm that turned derelict London docklands into a new financial district.
Canary Wharf said 69.41 percent of votes cast by proxy and at Monday's extraordinary meeting were in favour of offloading the two buildings, comfortably above the 50 percent needed but short of the 75 percent threshold required at the next vote.
The disposal was a condition of the bid led by Morgan Stanley and Canary Wharf's biggest shareholder, Simon Glick.
Canary Wharf shares were up 0.19 percent at 266-1/2 pence by 1211 GMT, in line with Britain's benchmark FTSE 100 index.
The result was a blow to Canary Wharf founder Paul Reichmann and Canada's Brascan Corp., one of Manhattan's biggest landlords.
The two leading Canary Wharf shareholders joined forces last week to vote against the disposals and the Morgan deal. Another significant stakeholder, Franklin Mutual Advisors LLC, also stated it would vote against the Morgan bid.
Canary Wharf shareholders are expected to meet again at a later date to vote on the Morgan offer, which still faces opposition from investors scenting a recovery in the London office market or holding out for a higher offer. Together, known opponents of the deal hold 24.7 percent of the vote.
"We think this is a bad deal ... and we don't think the Morgan Stanley deal can proceed," Cyrus Madon, senior vice-president of Brascan, told Reuters.
Reichmann, with 8.9 percent of Canary Wharf, and Brascan, with nine percent, have outlined a pact under which each agreed to sell their shares to the other under certain conditions.
The proposals stipulated that Brascan would agree to a Reichmann takeover so long as it was worth at least 275 pence per share, or 280 pence if the building disposals were blocked.
If Reichmann can't get the necessary backing for a deal, he in turn agreed to bow to Brascan, provided the Canadian property firm can muster at least 267 pence.
Martin Jacomb, Canary Wharf chairman and head of an independent committee that is running the sale process, said their was no guarantee any bid would go through.
"It is perfectly possible that there will never be an offer that succeeds from anyone," he told shareholders.
Some industry analysts say that might not be a bad thing for shareholders, given a predicted pick-up in the property sector in 2004.
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Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
