ACCC to definitively rule on $18.7bn bid for Origin by mid October after a second extension
The ACCC will rule on the $18.7bn Brookfield and MidOcean bid for Origin Energy by October 12 after the consortium agreed to a second extension – but no further delay will be granted.
The Australian Competition & Consumer Commission will now rule on Brookfield’s $18.7bn bid for Origin Energy in mid-October after the two parties agreed to a second short extension.
The extension is the second such delay but the ACCC and Brookfield said they had agreed there would not be a third.
The extension comes as Brookfield and consortium partner MidOcean move to convince the ACCC of the merits of its bid for Origin, a deal widely seen as a watershed moment for Australia’s energy transition.
Should the deal proceed, Brookfield will acquire the retail and energy generation assets of Origin while MidOcean will take control of Origin’s integrated gas business. It will also take on Origin’s 27.5 per cent stake in Australia Pacific LNG.
The ACCC in July revealed it was considering several elements of the Brookfield-MidOcean bid for Origin, highlighting the private equity giant’s infrastructure assets such as AusNet and its potential to adversely affect competition in Australia’s energy market.
The update was widely interpreted as the ACCC having doubts about the acquisition. In a move to allay those concerns, Brookfield has strengthened its undertakings, promising to split its renewable energy business from the infrastructure holding company and heightening the separation between Origin and AusNet.
Those commitments are designed to allay concerns by the regulator that Brookfield could have unfair access to transmission line connections for new and existing energy projects.
AusNet is Victoria’s principal electricity transmission network, and one of just five electricity distribution networks in Victoria and one of three gas distribution networks in the state. Such concerns had been widely anticipated, but Brookfield and MidOcean will hope the strengthened undertakings will win favour with the regulator, which is also weighing the public interest in Origin being acquired by the Canadian private equity giant.
Keen to satisfy the public interest test of the regulator, Brookfield and MidOcean said investment in new clean energy would now total between $20bn and $30bn, aiming to develop 14GW of new large-scale generation and storage capacity in Australia, a war chest Origin is unlikely to match.
The spending commitment is likely to appeal to many in Australia as the country struggles to meet its lofty green ambitions.
Industry sources said the ACCC may remain hesitant to endorse the spending commitment amid suggestions Brookfield would struggle to spend such a sum.
The ACCC decision is the most pressing hurdle to the deal. If the regulator rules against Brookfield and MidOcean, the consortium could appeal.
But there is also growing pressure on Brookfield and MidOcean to stump up more money.
Origin earlier this year accepted an offer from consortium, in a deal that values the retailer at $8.85 a share. But Macquarie analyst Ian Myles said Origin’s value has now increased, and a fair value would be between $9.49 and $10.08 a share.
Macquarie said Origin had recovered from the chaos that plagued Australia’s energy markets in 2022 faster than anyone had foreseen, while the company’s equity stake in Octopus Energy – which has grown rapidly to become Britain’s second-largest retailer – has also increased its value.
Brookfield has declined to comment on the assessment but sources say it foresaw the recovery of Origin and described Octopus as a nascent business when making its bid.
Read related topics:Origin Energy