It is just over six weeks since Qatar Investment Authority and Brookfield Group set their sights on Canary Wharf, making a £2.6bn offer for Songbird Estates, and as yet they have precious little to show for it.
The board of Songbird has rejected their offer not once, but twice, while the bidders have drained as much as £11m on a legion of bankers, lawyers and PRs.
It appears that the duo’s pursuit of Songbird – whose only asset is a near 70% stake in Canary Wharf Group – has, so far, failed to win over any major shareholders and risks complicating Songbird’s already notoriously complex corporate structure.
And I cannot imagine this takeover tango – according to some, a year in the planning – has done much to foster QIA’s and Brookfield’s relationships with their fellow investors in Songbird and CWG, or Canary’s management.
Sir George Iacobescu, chief executive of CWG, is said to be personally affronted that QIA and Brookfield, as part-owners of the wharf, initiated proceedings with a low-ball 295p-a-share approach.
In fact, the whole board of Songbird was clearly aggrieved and even the higher, final offer of 350p is viewed as an attempt to get the wharf for a song.
Naturally, QIA and Brookfield feel differently. They stress their offer is a choice 41.6% premium to Songbird’s six-month weighted average share price, and that for a year before things got exciting, the shares traded at significant discount to net asset value.
This argument has won the support of some minority shareholders but their backing is akin to being endorsed on LinkedIn – nice but pointless.
The decision lies firmly in the hands of Simon Glick, the New York investor, China Investment Corporation and Morgan Stanley. Unless one or more throws their lot in to take the acceptances to more than 50%, then the takeover fails.
The battle has now entered the final stages and unless the deadline is extended, the fate of the wharf will be decided by January 29.
Songbird launched a robust response this week arguing that shareholders should reject the offer as it undervalued the company and its pipeline but, curiously, the board also left the door open to change its recommendation if any large shareholder tendered their shares.
It does stretch credibility to believe that Songbird does not have an inkling of which way the main shareholders are going to vote, given that most occupy the majority of Songbird’s board seats.
Not to mention that the 350p offer is final and the only offer on the table for the past six weeks. By now the investors should have a view and are either seriously considering the offer or have been waiting for Songbird’s formal response to confirm their nay vote.
There are some big questions to ponder. CWG is embarking on an enormous and expensive development programme and, while confident it can secure funding, investors such as Morgan Stanley – whose Songbird stake is in a fund with a finite life – must decide if they are in for the long haul.
And Songbird’s fulsome defence has not even touched on how it would adapt its corporate governance and voting structure if the consortium hits the 50% threshold but fails to achieve full support. For example, would Brookfield, which despite having a 22% stake in CWG has never had a board seat or vote, finally be invited into the inner circle?
The Canadians are so keen on winning the wharf that they sold $1.8bn (£1.2bn) of preferred equities – units that can be converted into stock – in Brookfield Property to QIA. It is a “strategic investment” that stands regardless, but its aim was to give Brookfield enough liquidity, at some expense, to help fund a takeover.
The messy, alpha male ownership structure of Canary Wharf has long needed resolution, and all it needs is one big shareholder to flush out a deal but, for now, Songbird appears to be winning the battle.
Word reaches me that the bidders are already joking about Songbird “giving them the Heisman” – a saying across the pond springing from American football and its Heisman trophy, which shows a player giving a stiff-arm block to a tackle.
Deirdre Hipwell is mergers & acquisitions correspondent, The Times
