Battle for Australia office developer CPA nears end as rivals agree $1.1 bln asset sale

SYDNEY Mon Jan 6, 2014 10:11pm EST

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SYDNEY Jan 7 (Reuters) - Shares in two rival bidders for Australian office property developer Commonwealth Property Office Fund (CPA) rose in Sydney on Tuesday after the pair agreed a billion-dollar asset sale, paving the way for the end of a takeover battle.

Under terms of the accord announced in filings late on Monday, CPA's preferred bidder, a consortium led by Dexus Property Group, will sell five office buildings in Sydney and Melbourne with a combined value of about A$1.2 billion ($1.08 billion) to its rival property firm, The GPT Group.

The agreement, subject to the Dexus consortium acquiring over 90 percent of CPA, is essentially a consolation prize for GPT as Dexus and its partner finalise a A$3 billion deal recommended by CPA to its investors in mid-December.

GPT shares climbed 2.6 percent on Tuesday, trading at A$3.58 by 0256 GMT. Dexus rose 2.2 percent to A$1.02. CPA dropped back 0.6 percent to A$1.24, reflecting the market's view that Monday's agreement signals the end of the takeover battle.

"There is a bit of a concession by GPT to walk away from this, and the concession is that they will get five really nice assets," said IG market strategist Evan Lucas.

Both Dexus and GPT are large, diversified firms keen to lift their exposure to high-yielding Australian office real estate. CPA owns 26 office buildings in major business districts across Australia.

Backed by the Canada Pension Plan Investment Board (CPPIB), Dexus also said on Monday it's proposing an alternative offer of A$0.8496 cash and 0.3801 Dexus securities per CPA unit. That provides a bigger proportion of cash compared with the original A$0.7745 cash and 0.4516 securities.

CPA investors will be able to choose either the alternative offer, which values each CPA unit at A$1.272, or the original A$1.270 offer.

($1 = 1.1159 Australian dollars) (Reporting by Maggie Lu Yueyang; Editing by Kenneth Maxwell)

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