Join our community of smart investors

Songbird scorns takeover bid

Songbird has rejected a joint bid from the Qatar Investment Authority and Brookfield Property Partners, saying that the offer significantly undervalues Canary Wharf
January 13, 2015

The board of Songbird (SBD) - the real estate company that owns 70 per cent of Canary Wharf - has rejected the joint formal offer from the Qatar Investment Authority and Canadian property investor Brookfield Property Partners.

IC TIP: Ignore at 330p

Management says the 350p-a-share bid - increased from an initial indicative 295p approach - undervalues the company. Significantly, it's below Songbird's end-November net asset value of 381p a share and management points out that it also takes little account of the 11.5m sq ft development pipeline.

As well as its 21 per cent stake, Qatar now has support from 28 per cent of Songbird's free float, following a decision by two small shareholders - Madison International Realty and Third Avenue Management - to support the bid. But that's not enough and breaking the deadlock now rests with the other three major shareholders who, together, control more than 50 per cent of Songbird.

Specifically, Simon Glick, who helps run the Glick Enterprises property empire, owns almost 26 per cent; the China Investment Corporation has 15.8 per cent and US investment bank Morgan Stanley has 8.5 per cent. And while Brookfield owns 22 per cent of Canary Wharf, those shares aren't listed - it doesn't own any Songbird shares and therefore has no voting power. So without the support from at least one of the three shareholders mentioned, the bid can't succeed. All three are still evaluating the offer and haven't yet reached a decision.