Private equity powerhouse Brookfield and US-based infrastructure investor GIP were thought to be weighing an acquisition of Origin Energy last year when its share price was about $4, say sources.
The thinking for the groups was that a deal would make sense at about $6 per share, and when the price was at $4 this would bake in an adequate premium for an offer to be taken seriously.
However, the share price has since rallied to about $5.40, and the suggestion is that at that price the target is no longer attractive.
Origin Energy has been closely watched by deal makers who believe it could become a takeover target.
It has 4.2 million electricity, gas and LPG customers and owns a significant interest in Australia Pacific LNG, supplying 30 per cent of east coast demand and exporting LNG to customers in Asia.
Its share price has languished since the start of 2020 when the Covid-19 pandemic began, but it has been staging a rally of late on the back of the increasing oil price, partly linked to fears of supply shortages in Europe due to tensions between Russia and the Ukraine.
The company’s market capitalisation is now $9.5bn and its shares closed at $5.53 on Friday.
In January 2020, Origin’s share price was $8.65 and in May last year it struck a low of about $3.92.
The move comes despite major stocks being sold off since the start of 2022 as investors become wary of impending interest rate rises due to rising inflation and costs triggered by the pandemic.
GIP and Brookfield have been acquisitive in the local market recently.
GIP is part of the consortium buying Sydney Airport.
It has also agreed to buy a 49 per cent interest in Woodside’s Pluto Train 2 development off the West Australian coast.
Brookfield is in the process of a $10bn-plus buyout of AusNet.
It recently agreed to pay $1bn for a half share in Pacific Equity Partners’ smart metering company Intellihub.
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