Songbird Estates, the owner of London's Canary Wharf financial district, rejected an approach from Qatar Investment Authority and Brookfield Property because the proposed bid is too low.
The Qatar fund and Brookfield may offer 295 pence a share, Songbird said in a statement. The owner of about 6pc of Canary Wharf Group climbed 22pc to 320 pence in London trading yesterday after announcing the approach.
Songbird's suitors may have to raise their bid to more than 350 pence to succeed with a purchase that would be the biggest UK property deal of this decade, Peel Hunt analysts including Keith Crawford said in a note yesterday. Rents have begun to rise in the Docklands office district where Canary Wharf is located and residential construction in the area is climbing.
A purchase would offer "exposure to arguably the best large-scale developer in London as well as a unique part of London which is just starting to see rental growth," Oriel Securities analysts including Miranda Cockburn said in a note to clients. Any bid should reflect that the sellers would be asked to give up net asset value growth that's averaging at least 14pc a year, the analysts said.
Songbird's real estate was valued at £6.28bn (€7.6bn) at the end of June. The Qatar fund, which already owns 28.6pc of the UK company, and Brookfield have until December 4 to make an offer. Other Songbird shareholders include investor Simon Glick of New York, a unit of China Investment Corp. and funds managed by Morgan Stanley.
"This proposal significantly undervalues Songbird and does not reflect the inherent value of the business and its underlying assets," Songbird Chairman David Pritchard said in the statement.
Songbird gained 0.2pc in London trading and was priced at 321 pence on Friday giving the company a market value of £2.4bn. The closing price was the highest since October 2008.
Canary Wharf Group plans to develop 11 million square feet (1.02 million square metres) of offices and homes in London, more than any other company, according to Songbird's statement. (Bloomberg)
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