Origin Energy Turbulent Bid: Origin Energy finds itself entangled in a complex situation as shareholder resistance mounts against a revised bid put forth by a consortium led by Brookfield. The initial $10.6 billion offer faced imminent rejection, prompting a delay in the shareholder meeting originally set for Thursday. Now rescheduled for December 4, the meeting aims to evaluate the new proposal, introduced by the Brookfield-led consortium to salvage the deal. This revised offer allows institutional investors to retain parts of the company, adding a layer of intricacy to the transaction.
AustralianSuper, the largest shareholder in Origin Energy with a stake exceeding 17%, has publicly declared its rejection of what it deems a “low-ball offer.” The pension fund contends that the revised bid remains substantially below the long-term value of Origin, strengthening its stance against the deal. The A$300 billion ($195.24 billion) pension fund had already opposed the original offer, asserting that it significantly undervalued Origin’s potential to capitalize on Australia’s shift to renewable energy.
Brookfield, in response, reiterated its commitment to invest up to A$30 billion to lower Origin’s carbon footprint, aligning with Australia’s emissions reduction targets. However, the standoff highlights the unprecedented challenge of valuing assets in a sector subject to government intervention, particularly as Australia undergoes a significant transition toward renewable energy.
Under the new terms proposed by Brookfield, the A$9.43 per share bid remains intact, but the consortium introduces the possibility for certain investors to retain stakes in Origin’s energy markets business. The consortium’s partner, EIG Partners, is set to assume control of Origin’s integrated gas business, including its 27.5% stake in Australia Pacific LNG (APLNG).
In the event that the revised bid fails to secure the necessary 75% shareholder support, an alternative proposal has been tabled. This alternative suggests Origin selling the energy markets business to Brookfield for A$12.3 billion. Subsequently, EIG Partners would initiate an off-market takeover offer for the remaining stake in Origin, focusing on the APLNG assets.
Origin’s shares experienced a 1.1% decline, trading at A$8.33 just before the close of the market on Thursday. During a press conference, Chairman Scott Perkins expressed reservations about the revised deal, reflecting the complexities and uncertainties surrounding the ongoing negotiations.
The intricate dynamics of this unfolding saga underscore the challenges and shifting landscapes within the energy sector, especially as major players navigate the complexities of government interventions and the global transition toward renewable energy sources. The shareholder meeting in December will be a pivotal moment in determining the fate of Origin Energy and its strategic direction in the evolving energy market.