“For Origin to do what it expects to do as part of its business plan,it’s going to need to cut dividends or it’s going to need to raise capital,and that’ll be dilutive to shareholders,” Brookfield’s head of renewable power and transition group in Australia,Luke Edwards,said.
Edwards’ unit would take charge of Origin’s retail and power generation assets and use Brookfield’s deep pockets to invest up to $30 billion in renewables – far exceeding Origin’s own plans if it remains listed.
He said while Origin’s renewables plan resonates with many investors,the plan needs enormous capital investment and the Brookfield/EIG offer ($9.53 per share cash) is at a hefty premium.
“This is the best premium on a deal over $3 billion market cap in the last 10 years. And voting yes to this deal will be a catalyst for the acceleration of Australia’s energy transition,” Edwards said.
Brookfield/EIG hope the share price warning and sweet premium will entice Origin’s 122,000 shareholders to overcome the resistance from AustralianSuper.
For the bid to succeed,the suitors need 75 per cent of votes cast at the meeting. With average turnout for scheme votes usually around the 60 per cent mark,AustralianSuper could knock out the bid with no further support,as its 15 per cent stake would represent 25 per cent of shares voted.
The bidders need to lift shareholder turnout significantly and ensure almost all remaining shareholders back their offer.