ACCC sets the date for its ruling on Brookfield and EIG’s $18.7bn offer for Origin Energy

The ACCC has set the October date on which it will definitively rule on whether to allow Brookfield and EIG’s $18.7bn deal for Origin to proceed.

The Australian Competition and Consumer Commission will issue its decision on whether to allow the $18.7bn takeover of Origin Energy by Brookfield and EIG Partners on October 10.

The decision is a deal widely seen as a watershed moment for Australia’s energy transition, as Brookfield promises to spend between $20bn and $30bn to develop much-needed renewable energy generation projects.

If the ACCC vetos the deal, Origin is unlikely to be able to invest as much in renewable energy projects as a publicly listed business.

The decision is finely balanced, with Brookfield and EIG making a series of concessions in a bid to woo the competition regulator – although the ACCC has shown no appetite to simply wave through the transaction.

The ACCC has secured two extensions to allow for its deliberations, but the regulator will now definitely rule on October 10 – although it may not be the end to the takeover saga.

If the regulator rejects the consortium’s offer, Brookfield and EIG could lodge an appeal with the Federal Court. Even if the ACCC approves the transaction, there is a growing push by Origin shareholders for Brookfield and EIG to raise its offer.

Origin’s largest shareholder, AustralianSuper, last week said it believed the offer materially undervalued Australia’s largest electricity and gas retailer. The comments indicate Brookfield and EIG may struggle to secure sufficient shareholder support on the current terms.

Origin earlier this year accepted an offer from Brookfield and EIG that values the retailer at $8.85 a share. The shares are currently trading around $8.86, near a recent high of $8.89 - indicating shareholders believe the consortium will have to return with a revised offer.

Perpetual has also declared the $18.7bn bid too low, suggesting Brookfield and EIG will struggle to secure sufficient support for the deal as currently proposed.

To succeed, the bid requires the support of more than 75 per cent of votes cast. AustralianSuper and Perpetual hold more than 15 per cent of Origin, leaving little wriggle room for Brookfield and EIG.

Brookfield and EIG declined to comment on the shareholder rumblings, but sources close to the consortium insist their offer is fair when considering the vast amount of money that Origin will need to invest in zero-emission power generation and the impact of that on existing shareholders.

But first, Brookfield and EIG must overcome regulatory concern.

Brookfield’s ownership of AusNet, Victoria’s principal electricity transmission network, is widely seen as the critical potential inhibitor.

AusNet is one of just five electricity distribution networks in Victoria, and one of three gas distribution networks in the state.

Brookfield and MidOcean have offered a series of assurances and undertakings to secure the support of the regulator.

Australian regulators have highlighted the possibility that Origin could secure access to transmission infrastructure, which gives it a commercial advantage.

Brookfield – which will acquire the retail and generation assets of Origin – has said it will strengthen the ring-fencing of AusNet to ensure this doesn’t happen.

EIG is too under pressure to strengthen its undertakings. EIG’s subsidiary, MidOcean, has said it will not share LNG marketing information, which Shell raised as a concern in its submission to the regulator.

While Shell welcomed the undertaking, it said it was concerned about the prospect of sensitive market information being shared that would put it at a disadvantage.