Australian energy generator and retailer Origin Energy has backed an $18.4 billion buyout offer from a consortium led by Canada’s Brookfield Asset Management, Reuters reports.
If successful, the takeover would rank as one of the biggest private equity-backed buyouts of an Australian company, and would be the largest deal in the country this year.
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Brookfield and its partner MidOcean Energy, backed by private equity firm EIG, both said they saw big opportunities in Australia to invest in the transition to cleaner energy, and see Origin’s assets as the way to get in.
“Together, Brookfield and Origin can support Australia’s multi-decade transition journey and accelerate our progress towards its emissions-reduction targets,” Brookfield Asia Pacific CEO Stewart Upson said in a statement.
Origin’s share price soared as much as 40% but the stock gave back some of the gains to close up 35% at A$7.83 as investors and analysts assessed the risks involved in a deal of this size in a crucial sector.
The deal requires Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB) approval to proceed.
Origin opened its books to the consortium after it raised its offer to $9 per share in cash, a near 55% premium to Origin’s last close of $5.81. The company said it would recommend shareholders vote in favour of the proposal if no higher bid emerges.
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The offer will be increased by 3c per share per month if the scheme of arrangement, which requires 75% shareholder support, is not implemented by May 15 next year, Origin’s statement said.
The bid comes just as the Australian government is considering imposing price caps on gas to appease manufacturers and households suffering from soaring energy prices, partly due to the Ukraine war.
