The pair behind the £2.6bn bid for Songbird Estates have made a final appeal to shareholders to accept their bid.
The Qatar Investment Authority (QIA) and Brookfield Partners have been attempting to wrest control of the majority owner of London’s Canary Wharf since November.
Its appeal, made in particular to major investors China Investment Corporation (CIC), Simon Glick, and Morgan Stanley, comes seven days before shareholders must make their positions clear on whether or not they accept the bid.
QIA and Brookfield have focused their efforts on persuading the CIC to back the bid. With no representative on the board the Chinese group has remained tight-lipped on its intentions.
Sources within the QIA/Brookfield camp have told Property Week they have had talks with the Chinese regarding the bid.
Last night one source inside the Brookfield camp suggested the Chinese stake was very much in play.
“This will fall into Brookfield’s hands,” he said.
The bidding pair claimed their 350p a share approach provides an attractive opportunity for Songbird and for shareholders to realise cash at a premium of 41.6% to the share price before the initial approach was made on 6 November.
The pair also pointed to Songbird being a highly illiquid stock, which has not paid a dividend over the past five years. QIA and Brookfield also said the offer represented a 15.1% premium to the adjusted NAV per Songbird share of £3.04 recently published on 27 November 2014.
“Accordingly, QIA and Brookfield encourage Songbird shareholders, who have not yet done so, to accept the Songbird offer as soon as possible,” the bidders’ statement read.
Bidco has already received irrevocable undertakings and letters of intent over, in aggregate, around 6.7% of Songbird’s issued share capital, representing 32% of Songbird’s free float. In addition Franklin Resources, which holds 7.1% of the Canary Wharf Group shares, has indicated its intention to accept any cash offer for its shares which is made on a see-through basis to the Songbird final offer price.
Whether the bid is successful or not hinges on QIA and Brookfield winning over the other three major shareholders.
The Qataris already own 28.6% of Songbird, whose investment portfolio is worth £6.3bn. The next largest shareholder is US investor Glick with 25.9%, followed by CIC with 15.8%, and Morgan Stanley with 8.5%. The free float represents 21.1% of the holdings.
Even if the bidders managed to secure all 21.1% of the free float their backing would still fall short with 49.7%, together with QIA’s holding.
Meanwhile Brookfield has a 22% stake in the Canary Wharf Group, after competing with Songbird to take control of the company in 2004.
The first closing date of the Songbird offer is at 1.00pm on 29 January. Songbird’s shares were trading at 317.25p, down 0.63% this morning.