UPDATE 4-Australia's Transurban spurns $4.4 bln buyout bid

* Transurban leaves door open to takeover talks

* Shares surge 20 percent to 9-month high

* Canadian funds offered A$5.25 a share

* Canadian funds want maximum 78 pct stake in unlisted group

* Latest Canadian swoop on battered infrastructure groups (Adds offer details paras 6,9,10)

By Sonali Paul

MELBOURNE, Nov 5 (Reuters) - Australian toll road operator Transurban Group (TCL.AX) rejected a $4.4 billion buyout approach from two Canadian pension funds on Thursday, but left the door open to a better offer, sending its shares up 20 percent.

The offer, pitched 20 percent above its last close, marks the latest swoop on an Australian infrastructure group by Canada's pension funds, taking advantage of beaten-down share prices as their targets struggle to refinance debt in the credit crunch.

The offer for the owner of roads in Sydney, Melbourne and Virginia in the United States came from the Canada Pension Plan Investment Board and the Ontario Teachers' Pension Plan Board, which together already own about 28 percent of the group.

Analysts' valuations of Transurban are just above A$5 a share and an offer much higher than A$5.25 would be surprising, said Will Seddon, investment analyst at White Funds Management, which owns shares in Transurban.

"But they (the Canadian funds) might have a different view on valuations," he said.

Transurban said it remained willing to discuss proposals that would offer shareholders better value but called the existing offer too uncertain.

"CPPIB and OTPP note Transurban's willingness to enter into constructive discussions on bona fide proposals and look forward to the opportunity to discuss the details of the proposal with Transurban," they said in a statement.

Transurban shares soared as high as A$5.32 after the funds revealed their offer price, and last traded up 19 percent at A$5.24. The stock had been down 19 percent so far this year, badly lagging the broader market's .AXJO 22 percent gain.

The funds proposed offering A$5.25 a share cash or continued equity participation in Transurban's assets via an unlisted group, or a combination of both, on condition at least 22 percent of the unlisted group is owned by other Transurban shareholders.

The condition is designed to give institutional investors an opportunity to stay in the assets through a privatised fund.