Shares in Origin plunged 6.6 per cent to $8.47 a share at the close,following AustralianSuper’s announcement on Thursday.
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Allan Gray chief investment officer Simon Mawhinney said his company,which owns about 3 per cent of Origin’s shares,would be voting in favour of the renewed bid,but that AustralianSuper’s opposition could topple the deal.
“We thought Brookfield’s initial offer was reasonable and are very pleased with the increased bid,” he said. “It strikes a good balance between the risks that Origin faces and its prospects. But AustralianSuper’s shareholding is reasonably significant,and it may well be enough to scupper this deal.”
Mawhinney said Origin faced a number of risks including reservoir depletion for its LNG business as well as risks on the energy market side.
“I think the transition to renewable generation and energy storage for Origin’s electricity and gas retailing business and generation business are not risk-free,” he said. “It’s likely to be very costly,and it’s unclear what returns will flow to shareholders.”
Morningstar analyst Adrian Atkins said while Brookfield’s renewed bid was not a “knockout deal” he had recommended his clients to accept the offer.
“The new bid is still well short of what AustralianSuper wants,but I think a lot of other investors are probably happy with it,” he said. “I’m 50-50 on whether the deal gets through.”
Even if the deal fails,Atkins said there was some speculation that Brookfield could come back with an off-market takeover offer,which would only require 50.1 per cent shareholder support.
“If Brookfield comes back and tries to do an off-market takeover,investors could still get something close to the offer price,” he said. “Investors that like that offer can just take it.”
Origin’s valuations have varied across firms,with advisory firm Grant Samuel,in its report,valuing Origin’s shares between $8.45 and $9.48 a share.
However,some in the market still believe that Origin could be worth more,with Macquarie analysts estimating the company could be worth over $10 a share and RBC Capital Markets valuing the company at $9.75 a share.
Investors are due to vote on the deal on November 23.
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