Origin should walk away from Brookfield and EIG deal, Angus Aitken says

The Origin board should end negotiations after a sizeable chunk of shareholders voted to reject the near $20bn bid, says influential opponent Angus Aitken.

The board of Origin Energy should end negotiations with Brookfield and EIG after a sizeable chunk of shareholders voted to reject the near $20bn offer, says Angus Aitken, an influential but long-time opponent to the deal.

The Australian this week reported Origin’s board of directors will hold a series of talks with Brookfield and EIG to discuss the consortium’s revised two-headed deal for Australia’s leading publicly traded energy company.

But Mr Aitken, the Sydney-based stockbroker who holds sway over Australia’s investment community, said Origin should now end the deal.

“Can someone just put the bidders out of their misery, there is zero need to engage with the buyers. Surely time for the directors to show a backbone here,” Mr Aitken wrote to clients in a note seen by The Australian.

The call, while inconsequential to Origin – which must continue to engage with a bidder – may illustrate growing frustration with the deal that has lingered on for more than a year.

The Australian reported last week that Brookfield and EIG were just hours away from defeat for its signature energy transition deal before it tabled a revised offer, with 30 per cent of Origin shareholders having voted to oppose the transaction. Brookfield and EIG required support from 75 per cent.

Sydney-based stockbroker Angus Aitken. Picture: John Feder

Under the terms of the new offer, Brookfield and EIG will pay shareholders $9.43 a share, with the option of institutional investors buying in. This also requires support of 75 per cent of shareholders, which Brookfield and EIG were on course to fail to reach.

If that vote fails, then Brookfield and EIG have proposed that Origin shareholders would be offered $9.08 a share from EIG and Brookfield would buy the energy markets business for $12.3bn from its consortium partner. Critically, this deal requires support from 50.1 per cent of Origin’s shareholders, undercutting the capacity of AustralianSuper — which has a 17.5 per cent stake in Origin — to scupper the deal.

Origin’s board of directors has said it has reservations about the new offer, but has yet to make a formal recommendation.

If it rejects the offer, then Origin shareholders will vote on the previously endorsed deal.

But Mr Aitken said the board should take its cues from the voting.

“Surely there is one director around the board table who is having second thoughts about supporting this deal? If you don’t, you clearly think the largest fund in the land and 30 per cent of your register are dim wits,” Mr Aitken said.

“30 per cent of the register said no thanks to a takeover bid, your initial reaction to the Plan B is that it is inferior, why not just listen to your shareholders and get on with life?”

If the consortium cannot pick up new votes, and potentially even loses some influential investors, then attention will quickly turn to any so-called plan C from Brookfield and EIG.

EIG chief executive Blair Thomas earlier this month said the company had a “plan B and a plan C”, comments initially dismissed as bluster before the revised bid was submitted.

Origin shareholders said Brookfield and EIG could elect to try to undertake a hostile takeover, but they said it would be extremely problematic.

The uncertainty over the future will not be welcomed by Australian officials, which had hoped the deal for Origin would accelerate the country’s transition away from fossil fuels.

Brookfield has promised to develop 14GW of new renewable energy generation assets, extremely attractive for Australia as it struggles to achieve its ambitious target of having renewable sources generate more than 80 per cent of the nation’s electricity by 2030.

Originally published as Origin should walk away from Brookfield and EIG deal, Angus Aitken says