GlobeSt.com UPDATE: Brascan Gets New Backing for Canary Wharf Bid

LONDON-Brascan Corporation is at the centre of speculation that it is set to make a hostile bid for Canary Wharf after the Canadian conglomerate secured further shareholder support for its offer.

The announcement means the Canadians, through the takeover vehicle CWG Acquisition, now have the support of shareholders controlling 17.6% of Canary Wharf. The latest to give their backing are UBS Investment Bank, which brings 1.8% of Canary Wharf Group to the table. A letter from UBS said it would accept the offer for the company if CWG made a cash bid at 252p or more.

The board of Canary Wharf rejected Brascan’s current offer of 252p last week. But whether it will be able to hold that position remains to be seen. Brascan, which owns 9% of Canary Wharf, is heading up the CWG consortium, which also includes Hermes Pension Management and British Columbia Investment Management Corporation. CWG has already got backing from Franklin Mutual Advisors LLC, which represents shareholders with a 6.8% stake.

But former Canary Wharf chairman Paul Reichmann, who holds 7.75% in Canary Wharf, publicly announced last week at the company’s AGM that he was putting together a consortium to see if he could launch a bid for the group. The same AGM also rejected a bid from Morgan Stanley and the Glick family of 220p in cash and 35p in equity.

Should Reichmann put together a bid he could face opposition from analysts and shareholders who are unhappy at how Canary Wharf’s advisers and non-executive directors have handled the sale of the company. Criticisms range from the failure to attract more bidders, to the time has taken to get this far and for the time it took for Reichmann to step down from his executive position.