Docklands battle costs Canary Wharf €10m

The fierce battle for control of London Docklands developer Canary Wharf cost the group £10.7m (€15.8m) in the final six months of 2003, it emerged today.

Describing the period as a “difficult and unsettling time”, the group said fees paid to banks advising it on the takeover process had contributed to bottom-line profits nearly halving in the half year.

But Canary Wharf said a conclusion to the takeover battle was expected “in the near future” – more than nine months after it first revealed bid approaches.

Two bidders are competing for control of Canary Wharf – a former FTSE 100 company which lost its place among the elite in April following a slump in its share price.

A recommended offer is on the table from Silvestor – a Morgan Stanley-led consortium involving New York diamond magnate Simon Glick.

Canadian property group Brascan is also in the frame with support from Paul Reichmann, whose Olympic & York group developed the site in the late 1980s.

Canary Wharf said higher interest charges were the key reason why pre-tax profits before exceptional items and takeover costs fell for the six months to December 31.

The group said its underlying business was doing well and deals with media group Reuters and oil giant BP confirmed an improvement in leasing activity.

Rents had stabilised and Canary Wharf was optimistic of an improvement in the London market after a prolonged period in the doldrums.

Take-up levels were at their lowest for more than a decade but an improvement in financial markets had led to companies such as Barclays Capital expanding their offices at Canary Wharf.

Two properties were sold in December for £1.1bn (€1.6bn) with the proceeds used to cut debts and strengthen the balance sheet.

The group added that it was “well into” a planned reduction in construction workers, with the headcount being reduced to about 200 from a peak of 580.