Transurban knocks back takeover bid

Transurban Group's stapled securities jumped more than 20 per cent after the toll road group said it had rejected one "highly conditional" takeover move but left the door open for a sweeter bid.

Transurban said on Thursday it had turned down an "unsolicited, incomplete and highly conditional" takeover bid from two of its main shareholders - Canada Pension Plan Investment Board and Ontario Teachers Pension Plan.

"The board of Transurban group has evaluated with its advisers, Lazard and Mallesons, the proposal and has rejected it on its current terms," Transurban said in a statement.

The proposed scheme of arrangement valued Transurban at $5.25 a security, or about $6.7 billion and followed media speculation Ontario was planning a $6 billion privatisation of Transurban.

Transurban jumped more than 20 per cent on the news before its stapled securities closed up 85 cents or 19.36 per cent at $5.24, after the board touted its long term prospects and said the business was open to better offers.

"Consistent with its fiduciary duties, the board of Transurban remains willing to engage on bona fide proposals which provide appropriate value and certainty to security holders in a change of control transaction," it said.

The board reiterated its "significant confidence" in Transurban's performance and long-term prospects.

"The fundamentals of Transurban's business remain very sound, particularly against the backdrop of uncertain global economic times."

Transurban owns toll roads in Australia and the US including the Hills M2 in NSW, CityLink in Melbourne and the Pocahontas 895 toll road in Virginia.

Last month, Transurban said all its Australian assets were reporting traffic growth.

Traffic and revenue results for the first quarter of 2009/10 were particularly promising, chairman David Ryan said at the company's annual general meeting.

Chief executive Chris Lynch said new lenders had come on board, and a number were willing to offer longer tenor on the debt.

He also said the US remained an attractive market for Transurban, with $US1 trillion ($A1.1 trillion) in investment expected to be needed for new and upgraded transport infrastructure.