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Real Estate
Songbird: New Qatar Offer 'Undervalues' Company
From the Wall Street Journal of Fri, 05 Dec 2014 03:53:06 EST
Songbird Estates, the owner of London’s Canary Wharf business district, has rejected a sweetened takeover over from Qatar’s state investment fund and Brookfield Property Partners.
Songbird Estates, the owner of London’s Canary Wharf business district, has rejected a sweetened takeover over from Qatar’s state investment fund and Brookfield Property Partners. Bloomberg News

LONDON— Songbird Estates PLC, the owner of London’s Canary Wharf business district, said the sweetened £2.6 billion ($4.08 billion) takeover offer from Qatar’s state investment fund and Brookfield Property Partners LP, doesn’t reflect the full value of the company.

The real-estate company added on Friday that it will respond with a detailed view on the acquisition offer in due course. Songbird owns 69% of Canary Wharf Group.

Qatar Investment Authority and Brookfield made a 350 pence-per-share final offer for Songbird late Thursday.

“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,” said QIA, which already owns 28.6% of Songbird.

The new offer is 19% higher than the first proposal of 295 pence but falls short of Songbird’s own valuation.

Songbird last week said the value of its assets, which mostly consists of skyscrapers and retail space built on former docks in East London, had risen 19% since June to 381 pence a share. Even the increased figure didn’t account for some sources of future value, such as a new rail link being built across London, Songbird said.

One Songbird shareholder—Third Avenue Management, LLC, which holds 3.5% of Songbird—has agreed to accept the offer.

But the price could still be too low to secure the support of the three other investors that, along with QIA, control the lion’s share of Songbird stock, said Kate Renn, an analyst at Peel Hunt.

U.S. investor Simon Glick holds just over a quarter of the shares, the China Investment Corp. holds 15.8%, and Morgan Stanley holds 8.5%.

“We’d guess they would reject this offer,” Ms. Renn said. “Over the longer term there is a lot more money to be made,” she said, the highlighting the potential for developing new homes in the area.

Songbird has planning permission for 3,100 homes near its existing estate and plans to build apartments as part of its plan to redevelop the headquarters of Royal Dutch Shell PLC on London’s South Bank.

A successful bid would simplify Canary Wharf’s complicated dual ownership structure, a relic of a takeover battle that ended in 2004 when Songbird, originally set up as a buyout vehicle, saw off rival bidder Brascan. Brascan retained its stake and later became Brookfield, which holds 22% of Canary Wharf Group.

QIA also strengthened its ties with its partner by agreeing to buy $1.8 billion of Brookfield’s preferred securities, which are exchangeable into a 9% stake in the company.

Qatar already owns extensive real estate in London, including the Shard, the U.K.’s tallest building; the former Olympic Village site in Stratford, East London; and a former army barracks in Chelsea.

Angela Chen and Tapan Panchal contributed to this article.

Write to Ed Ballard at ed.ballard@wsj.com

Corrections & Amplifications

Songbird Estates PLC, the owner of London’s Canary Wharf business district, said the sweetened $4.08 billion takeover offer from Qatar’s state investment fund and Brookfield Property Partners LP, doesn’t reflect the full value of the company. An earlier version of this story incorrectly said the board had rejected the offer.



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