By The Canadian Press

TORONTO - Australian toll-road operator Transurban Group (ASX:TCL) has rejected a takeover proposal from the Canada Pension Plan Investment Board and the Ontario Teachers' Pension Plan that offered A$6.7 billion (C$6.5 billion) for the company.

Transurban said Thursday the offer was "incomplete, highly conditional and non-binding" and the board has rejected it under its current terms.

"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," the company stated.

Transurban added that the board has confidence in the company's performance and long-term prospects and the fundamentals of its business "remain very sound."

The CPPIB and Teachers' gave shareholders of Transurban a choice of A$5.25 (C$5.08) per share, other securities and benefits, or a combination of both.

The Canadian investment funds said the cash offer represents a premium of 20 per cent to the Transurban share price at the close of trade on Nov. 4. After the offer came to light on Thursday, Transurban shares soared 85 cents or 19.4 per cent to close at A$5.24 on the Australian Securities Exchange.

The two funds said they "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."

The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and retirees.

At the end of June, the CPP Fund had $116.6 billion in assets, of which $18.4 billion were private investments. The board has investments in stocks, real estate, inflation-linked bonds, infrastructure and fixed income financial instruments.

Teachers' is one of the world's largest private equity investors and the largest single-profession pension plan in Canada, investing funds on behalf of Ontario's 284,000 active and retired teachers.