GPT Group has ruled out increasing its off-market takeover offer for Commonwealth Property Office Fund (CPA), in a development that will likely see it bow out of the ongoing takeover battle.
In a statement to the Australian Securities Exchange, GPT chief executive officer and managing director Michael Cameron said the decision not to increase the consideration under the offer followed careful assessment of the competing proposal for CPA, and reflected a continued focus on GPT’s strategic priorities.
GPT said the offer remains open for acceptances until January 24, but it will not be extended beyond that date.
Late last year, Commonwealth Managed Investments Ltd's (CMIL's) independent directors, acting on behalf of CPA, unanimously recommended its shareholders reject GPT's offer in favour of a rival bid from Dexus Property Group Ltd and Canada Pension Plan Investment Board.
GPT Group made an off-market offer of 0.141 GPT shares for all CPA shares, and 75.3525 cents – reduced by the amount of any distribution paid on a CPA unit – on November 19.
The rival, sweetened bid from Dexus and the Canada Pension Plan Investment Board is valued at $1.27 per CPA unit, including a cash payment of 77.45 cents and 0.4516 Dexus stapled securities.
GPT said in the event that GPT's bid does not progress, previously received acceptances will be void.
Mr Cameron said the most important thing GPT can do is effectively allocate capital in order to generate the strongest possible total return over time for GPT securityholders.
"Achieving this objective requires GPT to make the correct decisions about sector allocations, when to buy and sell assets within the portfolio, and importantly not overpaying for assets," he said.
"It also means issuing or buying back equity when value can be created for securityholders, and not relying on increasing debt in a low interest rate environment to enhance short term earnings at the expense of long term total return.”