Brookfield and EIG’s $20bn bid for Origin Energy secures a recommendation from Glass Lewis

The recommendation from Glass Lewis is a boost to the bidding consortium which is likely going to need retail investors to support its almost $20bn offer for Origin Energy.

Global proxy adviser giant Glass Lewis has recommended Origin Energy’s shareholders support Brookfield and EIG’s almost $20bn offer for Australia’s largest electricity and gas retailer.

It’s the latest proxy adviser to support the deal, which is much needed if the Brookfield and EIG consortium is going to succeed in securing the 75 per cent of the support it needs for its offer of $9.53 a share,

Brookfield and EIG cannot afford to lose any votes as AustralianSuper – Origin’s largest shareholder with a 15 per cent stake – insists it will vote against the deal.
But Glass Lewis, which has significant reach to Origin’s large shareholder base, said on Thursday it believed the deal was in their best interests.

“We ultimately believe there is sufficient evidence to support the board’s view that the transaction is attractive,” Glass Lewis said in a statement issued to Origin shareholders and seen by The Australian.

The recommendation of Glass Lewis comes just days after Institutional Shareholder Services said shareholders should support the transaction.

Brookfield and EIG have seized on the recommendations as evidence that the consortium’s revised bid was securing a groundswell of support.

It last week lifted its offer by 69c per share, worth an extra $1.2bn. It marks a 70 per cent premium to where shares in Origin Energy were trading when the initial bid was submitted in November 2022.

The bid has won support from significant Origin shareholders such as Allan Gray, but others have yet to publicly disclose their position.

Sources close to the deal acknowledge that without AustralianSuper’s support, any victory for Brookfield and EIG was likely to be dependent on retail investors.

The uncertainty over the deal’s prospect has weighed on Origin share price. Shares fell more than 6 per cent last week when AustralianSuper said it would vote against the revised bid, although prices have rebounded slightly since. Origin shares have rebounded in recent days.

If the consortium’s bid fails at the shareholder vote, it could return with an off-market bid, which would result in one of the duo buying Origin and then selling a division to the partner.

Brookfield and EIG have won favour with Australian officials for their bid, as they promise to invest $20bn-$30bn to accelerate the nation’s transition away from fossil fuels.

Brookfield has said it will develop 14GW of renewable energy generation assets, higher than the 5GW that Origin has currently proposed.

The promise is attractive for Australia as it struggles to deliver its ambitious plan of having renewable sources generate more than 80 per cent of the nation’s electricity by 2030.

Originally published as Brookfield and EIG’s $20bn bid for Origin Energy secures a recommendation from Glass Lewis