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AustralianSuper rejects ‘final’ Brookfield bid for Origin Energy
By Supratim Adhikari and Millie Muroi
Origin Energy’s biggest shareholder, AustralianSuper, has rejected the “best and final” offer from suitors Brookfield/EIG after they raised their bid for Australia’s biggest energy retailer, in an effort to get the takeover across the line.
The takeover target on Thursday said the Brookfield-led consortium had bumped up its offer from $8.91 a share to $9.53 a share. But shortly before midday, AustralianSuper, which holds a 13.7 per cent stake in Origin, said it intended to vote against the renewed offer, maintaining the position that it was “substantially below our estimate of Origin’s long-term value”.
Origin said that the sweetened offer fully reflects its assets and its “strategic positioning for the energy transition”.Credit: Bloomberg
The Brookfield-led consortium needs 75 per cent of Origin’s shareholders to approve its offer.
The revised offer, now worth an extra $1.2 billion, came after AustralianSuper on Monday rejected the lower $8.91 a share put forward by the Brookfield-led consortium earlier this week.
Origin chairman Scott Perkins said on Thursday that the sweetened offer fully reflected the energy company’s assets and its “strategic positioning for the energy transition”.
“The revised consideration is now above the top end of the independent expert’s valuation range, allowing all shareholders to receive a certain cash value for their Origin shares.”
“We encourage all shareholders to vote in favour of the scheme,” Perkins said.
But AustralianSuper doubled down on its earlier statements, saying Origin had a “highly strategic portfolio of assets to participate in, and benefit from, the energy transition”.
“AustralianSuper believes the ongoing energy transition, as we move towards net-zero by 2050, has further enhanced the value of strategic energy transition platforms, such as Origin, whether public or private,” it said.
Shares in Origin plunged 6.6 per cent to $8.47 a share at the close, following AustralianSuper’s announcement on Thursday.
Allan Gray chief investment officer Simon Mawhinney said his company, which owns about 3 per cent of Origin’s shares, would be voting in favour of the renewed bid, but that AustralianSuper’s opposition could topple the deal.
“We thought Brookfield’s initial offer was reasonable and are very pleased with the increased bid,” he said. “It strikes a good balance between the risks that Origin faces and its prospects. But AustralianSuper’s shareholding is reasonably significant, and it may well be enough to scupper this deal.”
Mawhinney said Origin faced a number of risks including reservoir depletion for its LNG business as well as risks on the energy market side.
“I think the transition to renewable generation and energy storage for Origin’s electricity and gas retailing business and generation business are not risk-free,” he said. “It’s likely to be very costly, and it’s unclear what returns will flow to shareholders.”
Morningstar analyst Adrian Atkins said while Brookfield’s renewed bid was not a “knockout deal” he had recommended his clients to accept the offer.
“The new bid is still well short of what AustralianSuper wants, but I think a lot of other investors are probably happy with it,” he said. “I’m 50-50 on whether the deal gets through.”
Even if the deal fails, Atkins said there was some speculation that Brookfield could come back with an off-market takeover offer, which would only require 50.1 per cent shareholder support.
“If Brookfield comes back and tries to do an off-market takeover, investors could still get something close to the offer price,” he said. “Investors that like that offer can just take it.”
Origin’s valuations have varied across firms, with advisory firm Grant Samuel, in its report, valuing Origin’s shares between $8.45 and $9.48 a share.
However, some in the market still believe that Origin could be worth more, with Macquarie analysts estimating the company could be worth over $10 a share and RBC Capital Markets valuing the company at $9.75 a share.
Investors are due to vote on the deal on November 23.
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