GPT Quits Commonwealth Fund Battle, Paves Way for Dexus Win

Jan 14, 2014 1:08 am ET

(Updates with closing share prices in fifth paragraph.)

Jan. 14 (Bloomberg) -- GPT Group said it won’t increase its takeover offer for the office fund controlled by Commonwealth Bank of Australia, clearing the path for a rival bid from Dexus Property Group and the Canada Pension Plan Investment Board.

GPT won’t raise its cash-and-stock off-market offer for Commonwealth Property Office Fund, the Sydney-based company said in a regulatory filing today. The offer, which was worth A$1.226 based on yesterday’s closing price, remains open for acceptances until Jan. 24, it said.

The decision paves the way for Dexus and the Canadian fund to gain control of CPA, as the trust with A$3.9 billion ($3.5 billion) of office buildings across Australia is known. Dexus and CPPIB made a competing offer -- worth A$1.244 based on Dexus’s closing price yesterday -- which was backed last month by both Commonwealth Bank and CPA’s board. GPT’s unlisted funds last week agreed to buy A$1.2 billion of buildings held by CPA should Dexus win control of the trust.

“If this isn’t throwing in the towel for GPT, nothing is,” said Tony Sherlock, Sydney-based head of property research at Morningstar Australasia Pty. “It’s a positive that they’ve shown restraint. They take a step in their strategic strategy of growing their funds management platform; at the same time they’re not overpaying to hold the assets on their balance sheet, so it’s a pretty good outcome for GPT.”

CPA shares slipped 0.8 percent at the close of trading in Sydney today to A$1.23. GPT fell 0.3 percent to A$3.59 and Dexus slid 1.4 percent to A$1.025. The benchmark S&P/ASX 200 Index fell 1.5 percent.

Closing Date

GPT, which now controls 11.7 percent of CPA shares, decided not to increase its offer or extend the closing date for its bid after considering the Dexus offer, Managing Director Michael Cameron said in today’s statement.

Dexus now controls 25.4 percent of CPA, including Commonwealth Bank’s interest, it said in a separate filing today. The company last week offered the option of an alternative bid with a higher cash portion, valued at A$1.245 based on its closing share price yesterday.

--Editors: Chris Bourke, Edward Johnson