Late bid for Origin Energy as first offer loses power

Origin Energy has received a new last-minute offer from the Brookfield-led private equity consortium hoping to acquire Australia’s leading energy retailer.

Origin adjourned Thursday’s scheme meeting until December 4 to consider the new offer.

Based on proxy votes received to date, it was unlikely the previous offer would have achieved the required 75 per cent approval by shareholders, Origin said.

Origin’s largest shareholder, AustralianSuper, has opposed the $16 billion deal, saying it undervalued the company.

AusSuper on Thursday said it would vote its 17 per cent in Origin against what it called the “latest low-ball offer”.

The latest bid would allow institutional shareholders the right to reinvest into Brookfield-owned Energy Markets business but is otherwise at the same terms, about $9.43 per share, partially paid in US dollars.

In the event the scheme isn’t approved, the new offer has the option for an alternative transaction that would consist of Origin selling its energy markets business to Brookfield for $12.3 billion and EIG making an off-market takeover offer for its LNG business.

Shareholders would only receive $9.08 per share under this alternative offer, but it would only need the acceptance of 50.1 per cent of shareholders

“The board notes that the transaction appears inferior to the existing scheme,” Origin said.

“The board has significant reservations as to the complexity, conditionality and differing value, and potential adverse tax outcomes to Origin and shareholders.”

A spokesperson for Brookfield said the new offer was another pathway for the Origin board that continued to deliver value for shareholders.

“Our alternative proposal creates a further opportunity for investors to realise compelling value for their Origin shares if the existing scheme continues to be opposed by a handful of shareholders,” they said in a statement.

The offer remains at the top end of an independent expert’s valuation of Origin, they noted, while again highlighting Brookfield’s pledge to invest $20 billion to $30 billion over the next 10 years to decarbonise Origin if the deal is successful.

“Brookfield has access to capital, decades of renewables operating expertise and a global procurement presence,” the spokesperson said.

AustralianSuper said the new offer strengthened its view the proposition acquisition remained substantially below its estimate of Origin’s long-term value.

“AustralianSuper’s resolution is the value and future value of Origin is better in the hands of AustralianSuper members and other shareholders than a private equity consortium planning to shortchange them,” the super fund said.

“The challenge facing the nation as we work towards net zero by 2050 is not a lack of capital but rather a shortage of good quality investment opportunities.”