‘We don’t bluff’ – Brookfield and EIG’s plan B spurred by last AustralianSuper’s rejection

Brookfield and EIG’s revised bid for Origin came just hours before shareholders were set to vote, but its roots stretch back weeks.

The first Origin knew of Brookfield and EIG Partners’ revised bid came on Wednesday night just hours before a vote of shareholders was scheduled to finally settle one of Australia’s largest mergers and acquisitions deals in recent history.

But Blair Thomas – chief executive of EIG – said the development of the new bid first came together in early November when AustralianSuper, Origin’s largest shareholder, said it would not agree to the $20bn offer from the consortium.

Mr Thomas did not hide the consortium’s considerations even then, insisting the duo had a “plan B and plan C”, but most in the industry thought it was just an effort from EIG’s chief executive to heighten pressure on AustralianSuper to reject the offer – or worst still – empty bluster.

“We had hoped to convince the single investor who was holding out to participate in a private deal,” said Mr Thomas.

An invitation from Brookfield to AustralianSuper was almost immediately rejected, spurring yet more hostility between the two sides – a moment that convinced the consortium that so-called plan B options must be advanced.

“We had to get serious about plan B, and that’s what we did. We worked around the clock over the last two weeks, with an army of people to turn this into a reality,” Mr Thomas told The Australian.

Origin chief executive Frank Calabria and chair Scott Perkins on Thursday. Picture: Britta Campion

Mr Thomas was forthright in revealing EIG’s plan. The LNG business would raise the capital to purchase Origin and then they would sell the energy markets business to Brookfield.

“When I said we had options, the other side was very quick to come out and say ‘it was not possible and it couldn’t be done’. Well guess what, we did it. And what I would say to them is ‘we don’t bluff and we don’t play games’. We are doing exactly what we said we would do.”

Still, few believed EIG, speculating that the gas business could raise the finance.

Sources familiar with the plans said EIG was well advanced in securing the capital needed for the plan B option,

While relatively rushed, the revised bid is deliberately crafted in an attempt to sideline and undercut AustralianSuper. If Brookfield and EIG can overcome the Origin’s board initial scepticism towards the deal, the duo could win control of the business with the support of just 50.1 per cent of shareholders. While the consortium was diligently working behind the scenes, Origin was taken by surprise.

When finally lodged with Origin, it had to hastily convene the board to discuss the revised bid, the headline act in a series of surprises to fall on Australia’s largest electricity and gas retailer on Wednesday.

Chief executive Frank Calabria said the company had received notice of just a few hours of Australia’s drastically expanded capacity investment scheme, which drastically changes the landscape for owners of renewable energy developers.

The surprise of yet more Australian government intervention was quickly superseded by a revised bid, but a few more surprises could still emerge.

Origin Energy’s board of directors has indicated it has reservations about the alternative plan, and without the support of the target Brookfield and EIG will remain snookered by AustralianSuper’s stake – leaving it perhaps with one final roll of the dice – a hostile takeover.

Originally published as ‘We don’t bluff’ – Brookfield and EIG’s plan B spurred by last AustralianSuper’s rejection