Canary Wharf nears takeover deal

The Canary Wharf development helped rejuvenate part of London

Canary Wharf shareholders have approved the sale of two buildings in London's Docklands, clearing the way for a takeover by US bank Morgan Stanley.

The sales were a condition of the bank's bid for Canary Wharf, which is backed by some 70% of shareholders.

The vote will come as a blow to Paul Reichmann, the founder of the property company, who has teamed up with other investors to block Morgan Stanley.

The battle for control of Canary Wharf has been going on for about six months.

It has divided shareholders and seen Mr Reichmann resign as chairman.

Agreed bid

In early December, Canary Wharf's directors agreed a 265p-per-share bid from Morgan Stanley, valuing the firm at about £1.6bn ($2.8bn).

The offer, however, was conditional on the sale of the two buildings in east London.

Almost 70% of shareholders voted on Monday to get rid of the properties.

While the vote helps keep Morgan Stanley's offer alive, Mr Reichmann and investors including Canada's Brascan and US money manager Franklin Mutual Advisors feel that the bid undervalues the group's assets.

As a result, Mr Reichmann and Brascan have joined forces and the Canadian company is working towards making a new offer, worth at least 267p per share in cash.

Blocking votes

Together, Mr Reichmann and his allies may have enough votes between them to block any sale.

Franklin has already indicated it would use its 6.4% stake to vote against the Morgan Stanley bid.

Brascan said previously that it would accept a Paul Reichmann offer of 275-280p per share for its 9% stake.

And Mr Reichmann said he would accept 267p for his 8.9% holding.