A Quoted property company which trades at the sort of discount to net asset value that Canary Wharf does has about as much purpose as the proverbial pork pie at a Jewish wedding. It was only a matter of time before a bidder spotted that as well and yesterday the company’s share price shot up like one of its skyscrapers on news that several approaches have indeed been made. If Brascan is the bidder, it would also bring the wheel full circle since it was another bunch of Canadians, the Reichmann brothers, who had the vision fifteen years ago to see what Canary Wharf might one day become.Since then, it has collapsed, been resuscitated by the banks, bought back by Paul Reichmann who remains chairman, and floated again, only to crash once more in March after Canary Wharf admitted that life in Docklands was not as rosy as the management had been making out. Far from being full to bursting, the chief executive, George Iacobescu, admitted that vacancy rates might rise to 10 per cent by the year-end whilst large parts of developments nearing completion were not fully pre-let at all. Barclays, for instance, the latest bank to quit the City for a phallic symbol in the sky three miles east, is only contractually obliged to fill two-thirds of its space.The effect on the share price was so unpleasant that Canary Wharf asked its senior non-executive Sir Martin Jacomb, to chair an independent committee to “deal with any potential bids and to analyse other options” before the offers even began to flood in.

Advised by Lazard and Cazenove, Sir Martin has carte blanche to examine anything from a Reichmann/Iacobescu management buy-out to a total break-up.The last valuation produced by the company itself put the dizzying price of 563p per share on the business but nobody except Mr Iacobescu takes much notice of that in an age of falling rents and increasing vacancy rates.The shares rose by nearly a half yesterday to 260p but it will probably take something above 300p to make Sir Martin sit up and closer to 350p before he starts to talk serious turkey At that price the business would be worth around £2bn. Too rich, perhaps, for a rival UK property group or institution. But maybe not for a big international investor who looks at Canary Wharf and sees a long list of blue-chip tenants tied into longish leases and plenty of development work still taking place on land which the company already owns.If nothing else, yesterday’s approaches for Canary Wharf had a rejuvenating effect on other property stocks in particular and the market in general. To that extent, a bid for the company would represent a bet on the strength of economic recovery as much as anything.Water mergersWater companies and consolidation do not mix But that might be about to change. The Water minister Elliot Morley has dipped his toe in the water and suggested that the present bar on water company mergers may not be in the best interests of the industry or its consumers.Ever since privatisation in 1989, the water regulator has been obsessed with having the maximum number of comparator companies to chose from to help him set bills. The law, which requires any water company merger involving assets of more than £30m to be referred for a mandatory inquiry, has helped him in this.In one sense this aversion to mergers is understandable.

Water is a natural monopoly and so the industry largely remains a competition free zone – totally so as far as the domestic consumer is concerned. The next best thing, therefore, is to take the most efficient company and make that the benchmark for the rest of the industry.The upshot is that in the last 14 years there has been only one attempt among the 10 big water companies in England and Wales to merge and that failed to get past the competition authorities. Today, the current water regulator Philip Fletcher still has a pool of 22 comparator companies to dip into.In electricity distribution, which is also a natural monopoly, the situation is markedly different. Since privatisation in 1990, the number of separately owned companies has shrunk from 12 to eight and it will fall again to seven supposing Scottish & Southern Energy’s takeover of Midlands Electricity goes through. The regulator, in this case Ofgem, seems happy enough to get by with a much smaller number of comparators and indeed has put a price on how much should be paid to customers for the loss of each comparator – which is £35m.Needless to say, the bar on UK water companies swallowing one another has not stopped them from being picked off by their foreign counterparts – indeed if anything it has encouraged it. Thames and Wessex are now both overseas-owned and Anglian may be about to go the same way.Bill Alexander, the chief executive of Thames, fought a long and ultimately futile campaign to be allowed consolidate the UK water industry on the grounds that the bigger the company, the stronger it would become and the lower its cost of financing.