Origin Energy rejects revised bid from Brookfield and EIG, shareholders to vote on original near $20bn offer

Brookfield and EIG had sought to undercut the sway of AustralianSuper to reject its near $20bn bid for Origin Energy, but the energy major says the bid isn’t in the best interest of shareholders.

Origin Energy has rejected a revised bid from Brookfield and EIG Partners, concluding it was incomplete and too complex, setting the scene for a shareholder vote on the consortium’s near $20bn offer to likely be defeated at a meeting on Monday.

The decision is a blow to Brookfield and EIG’s hopes to finally secure Origin, with previous indications showing the consortium is struggling to woo prerequisite endorsement.

That’s been driven in large part by AustralianSuper, which has said it will use its position as Origin’s largest shareholder to block the takeover of the company.

Origin shareholders will now vote on Brookfield and EIG’s accepted offer, which due to the ongoing strength of the Australian dollar is now worth $9.39 a share.

While the board of the Australian energy giant on Thursday said it continues to endorse that bid, Brookfield and EIG will need to quickly garner more support for the deal if it is to succeed. The Australian reported last week the consortium were just hours away from defeat before the revised bid was tabled, with the consortium securing only 70 per cent support of electronic votes, shy of the 75 per cent it needed to get the deal over the line.

The rejection now leaves Brookfield and EIG scrambling to secure the support of an additional 5 per cent of shareholders without losing any votes already cast in its favour.

Brookfield declined to comment, but industry sources said they doubted whether the consortium could attract another five per cent of shareholders who had not previously voted or had opposed the deal.

The result of the shareholder vote was just hours away from being announced when Brookfield and EIG tabled a new two-headed deal designed to undercut the capacity of AustralianSuper to reject the offer.

Under the terms of the new offer, which should Origin had accepted would have replaced the original offer, Brookfield and EIG will pay shareholders $9.43 a share, with the option of institutional investors buying in. This also requires support of 75 per cent of shareholders.

If that vote failed, then Brookfield and EIG has proposed that Origin shareholders would be offered $9.08 a share from EIG and Brookfield would buy the energy markets business for $12.3bn from its consortium partner. Critically, this deal requires support from 50.1 per cent of Origin’s shareholders, undercutting the capacity of AustralianSuper — which has a 17.5 per cent stake in Origin — to scupper the deal.

Origin Energy's Eraring power station. Picture: Supplied

But in an announcement on Thursday, Origin said it had determined the new offer was not in the best interests of shareholders, and the existing offer that it had accepted more than a year ago will now be put to a vote.

“The revised proposal is incomplete, complex, highly conditional, and does not provide sufficient certainty for Origin shareholders. It is also the board’s view that the value of the revised proposal does not adequately compensate shareholders, including taking into account the extended timeline that the revised proposal would require,” Origin said in a statement.

The decision was not unexpected, with Origin chairman Scott Perkins declaring just hours after the bid was received that the board had significant reservations – but would carefully examine the bid.

With widespread pessimism over the prospects of the deal, shares in Origin fell more than 2 per cent.

The Australian Shareholders’ Association has called on Origin’s board to avoid a drawn out battle for the company.

ASA chief executive Ms Rachel Waterhouse said retail shareholders in Origin did not want the bidding process for the company to drag on for too much longer.

The bid was initially mooted in early November 2022, winning the support of the Origin board, and was formalised in March this year. The Brookfield consortium has raised the initial offer price over the period.

“It has been a long process over the past 12 months of offers and information,” Ms Waterhouse said.

“We always tell our members to make sure they read the full information pack and think about what it might mean for them, including their tax position.

“They don’t want a drawn out process with lots of different offers over time.”

“We don’t want to board to drag this out.”

Attention will now focus on Brookfield and EIG’s next moves. It is unlikely the consortium would have sufficient time to submit a revised bid to once more reset the clock, and further twists would likely antagonise the Origin board of directors. Sources said a vote was now overwhelming likely to proceed even if a fresh offer were to materialise.

If the deal is rejected by shareholders next week, the consortium could return with a new offer or elect to make a hostile bid for Origin – though investors said AustralianSuper’s stake would also make that extremely difficult for the duo.

A spokesman for AustralianSuper declined to comment.

EIG CEO Blair Thomas earlier this month hinted the consortium were drawing up plans, insisting the partners had a “plan B and plan C”.