CPA spurns Dexus on bid

Commonwealth Property Office Fund has pulled a deal giving Dexus Property Group and its Canadian pension fund partner the right to exclusive takeover talks following last week's blockbuster $3 billion offer for the fund by GPT Group.

Canada Pension Plan Investment Board and Dexus lost exclusive access to negotiations in their bid for Commonwealth Bank of Australia's listed office trust, a move that opens the door for others including offshore players to mount a competing offer for one of the nation's biggest office landlords.

The property fund's manager, Commonwealth Managed Investments, ended the exclusive talks after Dexus and CPPIB did not raise their $2.8 billion bid in response to GPT's competing proposal.

Monday's announcement allows GPT to begin discussions on the fund as it fights Dexus for control of the $3.8 billion of office buildings the fund, known as CPA, holds in Australia's largest cities. This puts GPT's chief Michael Cameron - a former executive with Commonwealth Bank - in the box seat for one of Australia's biggest property deals since the global financial crisis.

Dexus, which in July agreed to buy a 14.9 per cent stake of CPA, said last week it would not back GPT's offer and was refusing to sell its shares to its rival.

CPA's manager has invited Dexus and its Canadian partner to continue due diligence on the office assets, Dexus said in a statement. "The consortium has accepted that invitation and entered into a further confidentiality agreement," it said.

CPA's manager "shouldn't remain in exclusive discussions with one party when there's another proposal on the table", spokeswoman Penny Berger said. Ending the agreement allowed the fund's manager "to discuss the proposal with GPT, which they haven't been able to do until now", she said.

GPT, whose biggest shareholder is Singaporean sovereign wealth fund GIC Private Limited, may not be the only party interested in gatecrashing the deal with Dexus and Canada Pension Plan Investment, according to Stuart Cartledge, managing director of fund manager Phoenix Portfolios.

GPT's takeover bid had opened up the whole process, Mr Cartledge said. "Dexus were heading down the path of locking everyone out. I suspect we'll get a bid from someone we've never heard of from offshore."

CPA shares were unchanged at $1.265 at close of trade.

But as GPT and Dexus directors battle it out, more mergers and acquisitions are expected.

The sale of a 20 per cent stake in Australand by CapitaLand makes the former a more likely target. Another potential target is Investa Office.