Earlier,Brookfield and EIG had courted AustralianSuper – which manages almost $300 billion for 3.2 million members – sending it a letter outlining terms that would give it a seat at the transaction table. The pitch was swiftly rejected by the fund.
Loading
Market sentiment turned sharply against Origin during morning trade as investors sniffed the wind,pushing the company’s stock 4 per cent below its previous close of $8.10 to about $7.86,before its shares were placed in a temporary trading halt.
During the 390-day scramble for control of the energy giant,former prime minister Paul Keating blasted the takeover as a private equity “get rich quick” scheme. Australia’s competition watchdog backed it because of its energy transition benefits,and there was a frantic 11th-hour effort by the consortium to get the board’s support – unsuccessfully – for an alternative Plan B proposal.
The original scheme vote was adjourned on November 21 to give the board time to assess the revised proposal but,despite rejecting Plan B,the board continued to recommend shareholders vote in favour of the original scheme.
Canadian private equity fund Brookfield,and its US-based energy investor partner EIG,said last Friday that they would “respect” the Origin board’s decision not to back their Plan B,a proposal they hastily put to the board two weeks ago as support for the takeover teetered on a knife edge.
Plan B sought to gain shareholder approval – in the event the original takeover failed – for EIG to buy a controlling 50.1 per cent stake in Origin for between $9.08 and $9.33 a share,giving it Origin’s Australia Pacific LNG business while Brookfield paid $12.3 billion for the company’s energy market assets.
The proposal was rejected by the board last Thursday as “incomplete,complex and highly conditional”,leaving shareholders with just one option – to vote on the “best and final” offer.
Luke Edwards,Brookfield’s Australian head of renewable energy and transition,said the consortium would examine the Albanese government’s taxpayer-backed expansion of the capacity investment scheme before deciding whether it would pursue Origin further. “This intervention negatively impacts our view on the value of Origin energy markets,” Edwards said.
Brookfield’s bid included a 10-year plan to invest up to $30 billion in renewables.
The beefed-up capacity investment scheme will underwrite 32 gigawatts of new renewable energy and storage over the next four years in an effort to hasten the rollout of renewables,firm up the power grid as ageing coal plants retire,and push the country along the path of meeting the government’s goal of renewables supplying 82 per cent of power by 2030.
The total value of Brookfield and EIG’s offer,now worth about $16 billion,has fluctuated over time because it is partly linked to US currency exchange rates. The high-stakes takeover began last November,when the electricity retailer opened its books to its suitors after theylobbed a surprise $9-a-share bid to buy the company and divide its assets between them.
Origin’s board eventually accepted an $8.91-a-share offer in a deal structured to increase the bid price by 4.5¢ a month if the completion was delayed beyond November 30 this year,initially valuing Origin at $18.7 billion,including debt.
The Market Recap newsletter is a wrap of the day’s trading.Get it each weekday afternoon.