AustralianSuper rejects Brookfield and EIG offer to join Origin bid

The rejection will heighten market jitters about the prospects of the deal, widely seen as critical for Australia’s energy transition.

AustralianSuper has rejected an invitation to join Brookfield and EIG in their near $20bn offer for Origin Energy, as the superannuation giant moved to increase its stake and add another twist to one of the country’s largest takeover deals.

Brookfield and EIG are looking to secure support from 75 per cent of Origin’s shareholders for its $9.53 a share offer as AustralianSuper insists it will vote to reject the deal. Obstacles to the deal heightened on Monday as AustralianSuper increased its stake in Origin to around 16.5 per cent, a move that surprised sources close to the consortium which had expected the super fund to keep its stake steady at around 15 per cent.

In a bid to break the deadlock, Brookfield and EIG invited AustralianSuper to discuss how it could join the consortium, which would have essentially guaranteed the deal, but the approach was immediately rejected.

“AustralianSuper has rejected an eleventh hour and unsolicited letter received from the Brookfield and EIG consortium today and has reaffirmed that it will be voting against the Origin Energy takeover,” a statement from the superannuation fund said.

The Australian understands Brookfield and EIG indicated AustralianSuper could join the consortium after the duo’s transaction for Origin closed as the superannuation giant would have needed approval from regulators, slowing the transaction.

AustralianSuper’s rejection of the offer and move to increase its stake will sow yet more uncertainty in the minds of Origin shareholders. Origin shares have fallen in recent days as investors weigh the prospect that AustralianSuper will use its position as the company’s largest shareholder to block the deal.

Sources close to AustralianSuper said the fund believed the offer to join Brookfield and EIG illustrated the consortium’s concern that it will not secure the much-needed support for a transaction widely seen as critical for Australia’s energy transition.

It is understood AustralianSuper rejected the approach due to concerns about the structure and governance of the deal, issues that were a critical in the superannuation fund previously declining to join Brookfield and EIG in their bid for Origin, as previously reported by The Australian.

Sources familiar with the thinking of Brookfield and EIG denied the letter was any indication that the duo believed they had insufficient support, insisting the approach was more a gesture of good faith that could benefit all parties, and that the consortium had high confidence of winning the vote.

But animosity between the two continues to grow, with Luke Edwards, head of renewables at Brookfield, insisting that AustralianSuper’s moves amounted to slowing Origin’s decarbonisation.

“AustralianSuper has made it clear they don’t want to invest in an accelerated transition alongside Brookfield and they are standing in the way of retail investors receiving a compelling premium for their shares,” said Mr Edwards. “Retail investors should act now and vote in favour of our offer.”

A vote of Origin shareholders will be held in Sydney on November 23, with sources close to the energy group insisting the outcome will be tight.

To get enough support, Brookfield and EIG will need to win over Origin’s retail shareholder base, which own around 30 per cent of the company.

Momentum appeared to be with the consortium after recommendations from several proxy advisers, although institutional investors have largely kept their voting intentions private.

If the consortium’s bid fails at the shareholder vote, it could return with an off-market bid, which would result in one of the duo buying Origin and then selling a division to the partner.

Brookfield and EIG have won favour with Australian officials for their bid, as they promise to invest $20bn-$30bn to accelerate the nation’s transition away from fossil fuels.

Brookfield has said it will develop 14GW of renewable energy generation assets, higher than the 5GW that Origin has currently proposed.

The promise is attractive for Australia as it struggles to deliver its ambitious plan of having renewable sources generate more than 80 per cent of the nation’s electricity by 2030.

Origin shares rose 13c or 1.5 per cent to $8.78.