Canary Wharf to be bought by Qatar Investment Authority

Canary Wharf is to be bought by Qatar’s sovereign wealth fund and Canadian investor Brookfield Properties for £2.6bn, after Songbird, the owner of the Docklands estate, admitted defeat.

Ahead of Thursday’s deadline, Songbird said its three major shareholders intend to accept the offer, and once this happens it will drop its resistance and recommend the offer to smaller investors.

This means the Qatari fund can add east London’s financial district, with its cluster of towers, to its portfolio of prized assets, including Harrods and the Shard. Songbird shares rose 6.5% to 342.25p on the surprise announcement.

Songbird directors who own shares will also accept for their own holdings. Non-executive directors David O’Connor and Alex Midgen, who were appointed by the Glick shareholders, have stakes that are worth £1.9m and £390,000 respectively at the 350p offer price.

The Qatari Investment Authority (QIA), Songbird’s biggest shareholder with a 28.6% stake, and Brookfield have been trying to gain control of the property company since November. They welcomed the announcement.

The backing from New York investor Simon Glick (with a 26% stake), the China Investment Corporation and Morgan Stanley, the three biggest shareholders after the Qatari fund, means that QIA and Brookfield have secured 85.6% support.

Songbird owns the bulk of Canary Wharf Group, the owner of the Docklands estate. It is expanding for the first time since the 2008 banking crisis with plans for 30 buildings, including 3,100 homes, at Wood Wharf at its eastern edge. Songbird also owns 50% stakes in the Walkie Talkie skyscraper in the City and the Shell Centre on the South Bank, which it is redeveloping with QIA subsidiary Qatari Diar.

Songbird, chaired by David Pritchard, had hoped to find another acquiror willing to offer more but talks with several parties came to nothing, partly due to the company’s complex ownership structure. The firm maintained that the Qataris’ final offer of 350p a share, up from the initial approach of 295p, was too low, and formally rejected the terms on 12 January. An independent valuation carried out in November put Songbird’s value at 381p a share.

Minority investors Third Avenue Management, Madison International Realty and EMS Capital have already indicated their willingness to sell. Songbird is likely to to be de-listed from the stock market following the takeover.

Qatar stepped in with China’s sovereign wealth fund in 2009 to rescue Songbird when the business came close to collapsing under its debt.

Sir George Iacobescu, chairman of Canary Wharf Group, and the rest of the management will stay on. A source from the group said: “It is still very much business as usual and the company will continue its development drive.

“QIA and Brookfield have expressed their appreciation of the achievements of Canary Wharf as a company, its management and its assets. George has been assured by the potential new shareholders of their full support for the group’s business plan and first rate staff.

“He and the team are looking forward to working with them during what will be one of the busiest and most successful phases of Canary Wharf so far.”

The Docklands estate is the creation of the late Paul Reichmann who brokered the terms of the ambitious building project with then prime minister, Margaret Thatcher, in 1987. The Canadian property tycoon bowed out in 2004 after an ugly takeover battle that saw Songbird, then a consortium of investors led by Morgan Stanley, take control of Canary Wharf Group.