Origin’s top shareholder opposes Brookfield’s $15.35b bid

Origin Energy logo on side of corporate headquarters (profit)
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Origin Energy’s top shareholder has opposed a $15.35 billion buyout bid by a Brookfield-led consortium, saying its shares were undervalued, Reuters reports.

Superannuation fund AustralianSuper said it raised its holding in Origin by one percentage point to just under 14%, giving it more leverage over whether the deal goes ahead.

“Origin’s current share price is substantially below our estimate of its long-term value and this is why we have increased our holding in the company,” AustralianSuper said in a statement that did not refer to the buyout.

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Origin agreed in March to the offer, one of Australia’s biggest of the year, from a consortium of Brookfield and US investment firm EIG Partners valued at AUD$8.91 per share.

But Origin’s shares have traded well below that price amid uncertainty over competition issues, with shares closing at AUD$8.70 on Thursday—up 0.4%.

An Origin spokesperson said the company noted AustralianSuper’s “continuing confidence in the future of the business”.

Brookfield issued a statement Thursday morning confirming it had increased the cash consideration offered to all Origin shareholders by a total of approximately AUD$0.69 per share, or approximately $1,200 million, to $9.531 per share.

The consortium confirmed that the increased consideration was its best and final offer under the scheme.

“The revised total cash payment is above the top end of the Independent Expert’s valuation range of AUD$8.45 to AUD$9.48 per share and represents an increase of approximately 8% relative to the total cash payment outlined in the Scheme Booklet of approximately AUD$8.81 per share,” the consortium said in a statement.

Brookfield Asia Pacific CEO Stewart Upson said, “We have worked hard to deliver the best possible offer reflecting all the current circumstances of the company. Our revised offer price is our best and final offer as to price under the Scheme and is a compelling opportunity for shareholders to realise the value of their investment. Our proposal is now higher than the top of the valuation range identified in the Independent Expert’s Report and is endorsed by the Origin Board.

“We believe that for Australia to meet its climate targets, organisations such as Origin need to embark upon an accelerated transition plan. In order to achieve this, the Brookfield Consortium plans to invest $20 billion-$30 billion through Origin over the next 10 years.

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“Origin’s existing plan is to build 4GW of renewable energy by 2030, resulting in a slower transition to net zero compared to Brookfield’s proposed investment program. With its current funding sources and as a public company, Origin will not to be able to match the level of investment at the scale and speed as it could achieve under Brookfield’s ownership.

“Under Brookfield’s ownership, we will fund and facilitate the required investment. Our capital is committed and not contingent on any future capital raise processes. We firmly believe that Origin will be best placed to transition its business in a private setting with the backing of Brookfield and its institutional partners, and this will bring material public benefits to Australia.”

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