Songbird rejects QIA’s and Brookfield’s raised £2.6bn bid

Songbird Estates, which controls Canary Wharf Group, has rejected a sweetened bid of £2.6 billion ($4.1 billion) from Qatar Investment Authority (QIA) and Brookfield Property Partners, saying it is not enough.

The all-cash hostile offer valued the shares at 350 pence each, representing a 33% premium on Songbird’s closing share price on 5th November, 2014.

Songbird said in a statement on Friday:

“The Board believes the Offer from QIA and Brookfield does not reflect the full value of the Company, its unique position and future growth potential.”

Canary Wharf is London’s second most important financial district, after the traditional City of London. Several British financial institutions have their headquarters there, including Barclays and HSBC, while Citi and many other multinationals house their European nerve centers in the area.

Songbird Canary Wharf

The Canary Wharf district will soon be the premier financial area of London. (Photo: Canary Wharf Group)

Songibrd rejected the initial offer of £2.2 billion, saying it is worth much more than that. Last week, it said a re-assessment of the business valued it at about £2.82 billion because rents and property values in the Canary Wharf district had picked up. Some analysts wondered whether it might have scared off the suitors.

While Songbird holds a controlling stake in Canary Wharf Group, QIA owns 28.6% of Songbird, and Brookfield is a 22% stakeholder in Canary Wharf Group.

On Thursday, QIA and Brookfield announced that QIA is buying $1.8 billion in Brookfield exchangeable preferred equity securities, giving it a 9% stake in Brookfield.

Regarding the transaction, Brookfield CEO Ric Clark said:

“The placement of $1.8 billion of equity is a great endorsement of our global premier asset strategy. We are on the path to building the world’s leading portfolio of best-in-class property assets. This capital will enable us to launch BPY to the next phase.”

QIA said:

“We are making this strategic investment in Brookfield Property Partners as part of our investment plan to diversify globally in the real estate sector. This transaction takes our existing institutional relationship with Brookfield Asset Management to the next level, establishing a global platform for us to ‎continue our collaboration with Brookfield.”