The AUD 1.27 a share offer from GPT Group for Commonwealth Bank of Australia's office trust was rejected by Dexus Property Group. The largest listed office landlord in Australia, Dexus Group has a 15% stake in the trust. In a statement to the stock exchange today, Dexus said it will continue to bid for the Commonwealth Property Office Fund or CPA together with the Canada Pension Plan Investment Board. Dexus and the Canada pension fund increased their AUD 1.15 a share offer for the trust to AUD 1.2052- a share on November 11. GPT Group needs to get the vote of 50.1% of the shareholders of CPA in order for their takeover bid to succeed.
The trust has AUD 3.9 billion or USD 3.6 billion worth of office buildings spread out in Australia's largest cities. Dexus and GPT are wrestling for control of the CPA in order to bolster the assets they manage and improve the quality of their portfolio of properties. According to a Bloomberg report, Dexus agreed to obtain a 14.9% stake in CPA on the same day that Commonwealth Bank announced that it would be exiting from the property management business.
Morningstar Australasia's Head of Property Research Tony Sherlock told Bloomberg, "Dexus has taken tactical moves beforehand, and this is where there's scope for them to exploit them. Dexus's bid is at the upper end of most investors' comfort range, so I'm not anticipating a sweetened offer from Dexus. But that's not to say that more offshore money couldn't come in."
If GPT successfully acquires all shares in the office trust, GPT said it already has a deal in place which would sell CPA's buildings to GPT's unlisted office fund in a AUD 1.1 billion deal. Dexus said that with their rejection of GPT's bid, the latter will not be able to continue with their plan.
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