Origin Energy takeover deal on track and could be finalised next week: RBC
An $18bn binding deal for Origin Energy is moving ahead and is expected to be finalised in the next week with it faceing no major roadblocks, according to RBC.
An $18.2bn takeover deal for Origin Energy faces no major roadblocks, RBC said, with a binding deal expected to be finalised by bidders Brookfield and EIG in the next week.
The consortium trimmed its offer in February to buy Origin after months of due diligence and uncertainty about the impact of Labor’s intervention on gas prices.
A bid was lowered to $8.90 a share after the duo previously offered $9.00 a share in November, with a scheme of arrangement offer remaining indicative and non-binding.
The deal is now expected to proceed with a binding signed contract next week. RBC said there were no major hurdles despite ongoing concern over intervention by the federal government.
“We continue to see no major roadblocks to the non-binding and indicative offer for Origin Energy progressing to a binding proposal for the whole company,” RBC analyst Gordon Ramsay said.
The buyout would see Origin split into two.
Brookfield would control Origin’s energy markets business comprising electricity and gas retailing while EIG’s MidOcean unit would buy the integrated gas business which includes the prized APLNG export plant in Queensland.
The deal includes a plan for Brookfield to invest an extra $20bn in Origin through 2030 to build new renewable supplies and back-up energy capacity, a pledge reaffirmed in February by the North American investment giant.
The Australian government complicated the landscape for energy investors with its December legislation capping gas prices in the domestic market for a year, and giving itself power to intervene in gas markets on a permanent basis.
The intervention was slammed by Australian LNG producers, and drew concern that it could derail the Brookfield-led takeover.
Under the new proposal announced, holders of more than 100,000 shares would receive $4.33 plus $US3.19 a share above that threshold, reflecting Origin’s 27.5 per cent stake in Australia Pacific LNG.
The deal is conditional on Origin advising shareholders to vote in favour of the revised deal.
Other conditions require a scheme implementation deed with the ACCC, FIRB and other regulatory approvals, completion of full due diligence, Origin entering into no material acquisitions or divestments; and the power giant undertaking certain hedging requirements.
The price would be reduced by any dividends paid by Origin prior to completion, including the 16.5c a share fully franked dividend announced on February 16.
A 4.5 cents per month ticking fee, accruing on a daily basis, will be payable to the extent completion of the scheme is delayed beyond 30 November 2023.