Australia’s CPA rejects $2.6b takeover bid from CPPIB, Dexus
The Commonwealth Property Office Fund (CPA) has rejected a A$2.7 billion ($2.6 billion) takeover bid from the Canada Pension Plan Investment Board (CPPIB) and Dexus Property Group (DXS) to acquire the trust's Australian office portfolio.
In July, DXS announced it had entered into a forward contract with Deutsche Bank which gave it the right to acquire a 14.9% interest in CPA, the Commonwealth Bank of Australia's office trust. To buy all the remaining CPA units, DXS and CPPIB made a joint offer on October 11 with a headline offer price of A$1.15 a unit. The bid was equal to CPA's October 10 closing price of A$1.155.
The office portfolio had a book value of A$3.7 billion as at June 30, according to the CPA.
"The Board has determined that the DEXUS Proposal does not provide a compelling value proposition for CPA unitholders," Richard Haddock, independent Chairman of Commonwealth Managed Investments (CMIL), said in a statement.
CMIL will not grant access to the due diligence material, but "should the consortium decide to submit a revised proposal with improved terms, it will be considered on its merits", he added.
The offer was a mix of cash and DXS scrip consideration, paying A$0.680 in cash and A$0.4516 a unit in stapled securities for the remainder of the trust.
CPA would have become unlisted if the deal had gone through, managed by DXS and owned equally by DXS and CPPIB. DXS had also submitted an ancillary proposal to take over the CPA management team.
DXS invests in Australian office and industrial properties and also manages these on behalf of third party capital partners. Its office portfolio consists of over 900,000 square metres across Sydney, Melbourne, Brisbane and Perth, and it is one of the largest institutional owners of office buildings in Sydney, Australia's largest office market.
The deal would have taken increased its office assets under management from A$7.8 billion to A$11.5 billion, with a 26% share of Sydney prime grade office.
Last year CPPIB acquired interests in two Australian shopping centers through a A$436 million ($450 million) investment in AMP Capital Retail Trust. CPPIB has a 37% stake in the trust, which in turn owns 50% of Macquarie Centre in Sydney and 80% of Pacific Fair Shopping Centre on the Gold Coast.
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