When the Qatari Investment Authority (QIA) and Brookfield Partners revealed their initial £2.3bn bid for Songbird in November few gave their attempt to wrest control of the Canary Wharf property empire any chance of success.
The naysayers were still very much in the majority even after the bidders made their final offer of £2.6bn last month. In fact, up until a couple of days ago you would have been hard pushed to find anyone in the City who took the bid seriously.
But, just two days ago feelings began to shift. And it wasn’t the sweeping up of the free float in Songbird by the bidders that swayed anyone. Nothing the Qatari sovereign wealth fund or the Canadians has said up to now has swayed opinion one iota. Even if the bidding pair grabbed the entire 21.1% held in the free float and combined it with QIA’s 28.6% they would still fall short. And surely there has never been anything more certain than Songbird’s other major shareholders doing anything other than rejecting the bid. Well, at least that’s what Songbird’s board has been banking on since this bitter battle began.
Nope, nothing the bidders could say or do would convince anyone they were serious contenders. Nevertheless, minds are changing, and that’s because of what Songbird has said, no one else.
Read this Tuesday’s Songbird rebuttal carefully. Despite the forceful, if predictable, claim the 350p-a-share offer shows “no value” for the potential for Canary Wharf Group to benefit from future development and rising values, there is one line that provides the bidders with hope.
Songbird also suggested its board was open to changing its position once it is informed of its shareholders’ views. In other words, should another major shareholder back the bid, then it is possible Songbird will too.
So, what has caused this subtle, but nonetheless significant, shift in Songbird’s language? It’s simple. Songbird is concerned one of its major shareholders is considering switching sides. Which one?
Well, it’s unlikely to be Simon Glick with his 25.9% holding. He is believed to be steadfastly against the takeover. And Songbird is unlikely to be overly concerned with Morgan Stanley’s position, as its 8.5% become significant only if the bidders grab another 7% from minority shareholders taking support for the offer to 42.3%. Nope, it’s not them Songbird is worried about. When the group told us shareholders were “continuing to evaluate the offer” they meant the Chinese.
With its 15.8% the China Investment Corporation (CIC) can take the bid over the top today if it so desired. The problem for Songbird is they are not yet certain of exactly what the Chinese desires. CIC has no representative on the board, and to this point has not voiced any opinion on the matter in hand.
Do the bidders know something Songbird doesn’t? Do they have an inkling of where Chinese sympathies lie?
You only have to chat for a few minutes to someone on the QIA/Brookfield side to get the first real sense of optimism since this saga began. Following the rebuttal statement one said to me “Songbird is going to come out looking very stupid when this is over”. Another said “people around here at certainly more optimistic”.
The battle for Songbird isn’t over until Chinese Canary sings.