It is an unsolicited, indicative and non-binding cash proposal from ALE's largest shareholder, Caledonia (Private) Investments P/L, which holds 25.84 per cent and is looking to acquire the rest of the register it does not own.

ALE's board, of which its current chairman Peter Warne is also taking the same role at Macquarie Bank, has rejected the $3.95 per security offer, saying it would "significantly undervalue ALE and accepting such an offer would not be in the best interests of ALE security holders".

ALE's last traded at $3.61 a security and has a market value of $706.7 million. In the year to June 30, ALE reported a distributable profit of $29.1 million, which was down on the previous year's $31.2 million due to higher borrowing expenses.

However the group still exceeded its full-year distribution guidance paying 16.85¢ per stapled security, up from a forecast 16.45¢, after paying an additional 2¢ from prior period accumulated profits.

The group, which is run by managing director Andrew Wilkinson, is the landlord to 86 pubs across the country, valued at $900.5 million and most of which are leased to the Woolworths-controlled ALH Group. Some of the pubs include the Young & Jackson, Melbourne and the Crows Nest Hotel, Sydney.

"On this basis, ALE has advised Caledonia that it will not be progressing the proposal," the ALE said in a statement to the ASX after the close of trade on Wednesday.

"The ALE board continues to assess a number of opportunities designed to further grow distributions and security holder value in line with its consistent strategy."

Mr Wilkinson said no action was required, at this stage, by ALE security holders.

The Caledonia offer was conditional on a unanimous recommendation from the ALE Board to accept the offer in the absence of a superior proposal and entry into a Bid Implementation Agreement containing customary deal protection provisions.

The offer comes as the long-running battle for Australian Industrial REIT ended with Tony Pitt's 360 Capital emerging the victor.

After about 10 months, ANI's board accepted the cash and scrip offer from 360 Capital Industrial Fund, after a last minute full cash offer from a South African consortium did not materialise.

Once completed, the 360 fund will own ANI's $330 million worth of industrial facilities across Melbourne, Sydney and Perth.

Macquarie Equities has said it anticipates further M&A in the REIT sector factoring cheap capital, limited organic growth opportunities and a relative inability to acquire assets in the direct market at favourable pricing.

"Potential scrip tie-ups with similar motivations to this telcos deal remain Stockland and Mirvac, Charter Hall Retail REIT and SCA Properties as well as a change in control/restructure at Westfield Holdings," the Macquarie Equities analysts said.