Franklin Mutual Advisers has written to Songbird Estates’ board urging it to accept a £2.6bn takeover bid for the company or seek a higher offer from another party.
The US asset manager is the third largest shareholder in Canary Wharf Group in which Songbird holds almost a 70% stake.
The QIA currently holds 28.6% of Songbird, while Brookfield owns 22% of the subsidiary, CWG. Franklin, which owns 7%, wrote to the Songbird board this week, and urged its directors to accept the 350p bid unless a higher price can be found.
Peter Langerman, president of Franklin, wrote to Songbird’s chairman David Pritchard earlier this week. In his letter he wrote: “If the board believes it can provide an immediate superior offer then it should start the process. In the absence of a cash alternative, we believe the board has an obligation to enable shareholders to realise their investment.”
“Our judgment is that [the QIA/Brookfield offer] is an acceptable price to us,” he added.
Langerman said the offer “is attractive” and Franklin, which has been a shareholder in CWG for almost 20 years, would accept such a price for its CWG holding if one were to be made.
The bidders indicated they were prepared to offer 350p and has until the beginning of January to make a formal bid. It also stated the cash offer would be its final bid, so cannot raise it.
Songbird rebuffed the approach claiming it “does not reflect full value” for the company, but will not make a formal recommendation to shareholders until a formal bid letter is received.
At 350p the offer is 18% above an original approach of 295p per share, which the QIA and Brookfield put forward in November. However, an independent valuation of Songbird’s assets carried out last month put its net asset value at 381p a share.
Langerman’s letter to Songbird’s board also states the convoluted ownership structure of Songbird and CWG is “inefficient and a barrier to enhancing the value of the assets.”
The complex ownership structure dates from a takeover battle in 2004, in which the newly formed Songbird, backed by New York magnate Simon Glick, beat off bids to control one of Europe’s largest business districts from Brookfield and the area’s original developer Paul Reichmann.
However, a source close to Songbird’s board have rubbished Langerman’s attempt to influence the future of the company.
“For Franklin to question Songbird’s structure seem somewhat odd,” said the source. “Coming from a company in which no shareholders can trade or liquidate stock even if they wanted to seems somewhat of a double standard. Shareholders in Songbird can sell stock when they want to.
“It should also be noted Franklin is a 7% shareholder in CWG, and that Songbird is a near 70% shareholder in CWG. Franklin is not a shareholder in Songbird. It remains the case no offer has yet been formally made to the Songbird board and no formal response to an offer of 350p will be made until that formal offer arrives.”
Glick currently holds 26 per cent of Songbird. Other major shareholders are the China Investment Corporation with 16%, and Morgan Stanley with 8.5%. Another 20% of the shares trade as a free float.
Three public shareholders have stated their intention to accept the QIA/Brookfield offer. Madison International Realty, Third Avenue Management and EMS Capital between them hold nearly a third of the free float.