j.p.morgan sees m&a potential for cpa

Jul 24, 2013
Asia

J.P.Morgan Sees M&A Potential for CPA After CBA Offer


By Gillian Tan
Commonwealth Bank of Australia CBA.AU +0.53%’s offer to sell management rights to three of its property trusts could spark mergers and acquisitions activity J.P.Morgan JPM -0.07% told clients Thursday.

The broker believes the trust most likely to be targeted is Commonwealth Property Office Fund CPA.AU +4.16%, which has a market value of 2.7 billion Australian dollars (US$2.5 billion). “We believe an alternative proposal directly to CPA unitholders is possible,” J.P.Morgan’s Rob Stanton said in a note upgrading the stock to Overweight from Underweight.

“An aggressive competitor could justify a 5.25% gross assets premium just from the stamp duty – that equates to around a 7% premium to net tangible assets – and gain synergy benefits from additional scale,” Mr. Stanton said.

Commonwealth Property Office Fund manages a portfolio of retail and office assets across Australia and New Zealand. —Reuters

The broker noted CPA’s listed rivals including Dexus Property Group DXS.AU +1.46%, Investa Office Fund IOF.AU +0.86%, GPT Group GPT.AU +0.41% and Mirvac Group MGR.AU +1.50% could be interested, and suggested fund managers like Charter Hall Group CHC.AU +3.59%, AMP Ltd. AMP.AU -1.18% and Lend Lease Group LLC.AU -0.89% may privatize the trust.

J.P.Morgan also warned shareholders not to hold their breath for a deal, pointing to the fact it took Rorin Property Group, which was formed when AMP internalized its property unit, around 15 months trading solo, before Multiplex snapped it up in 2004.

But a takeover could come sooner than expected. Dexus Property Group — advised by Deutsche Bank AG DBK.XE +1.84% — said Thursday that it has acquired a 14.9% interest in CPA, by way of a forward option. The agreement gives Dexus the right to pay A$1.1334 a share, or A$397 million, for the stake

http://blogs.wsj.com/moneybeat/2013/07/24/j-p-morgan-sees-ma-potential-for-cpa-after-cba-offer/