{"id":43952,"date":"2023-11-06T06:39:03","date_gmt":"2023-11-06T06:39:03","guid":{"rendered":"https:\/\/lethal-industry.com\/?p=43952"},"modified":"2023-11-06T06:39:03","modified_gmt":"2023-11-06T06:39:03","slug":"origin-bidder-digs-in-for-a-full-throated-fight-to-persuade-shareholders","status":"publish","type":"post","link":"https:\/\/lethal-industry.com\/world-news\/origin-bidder-digs-in-for-a-full-throated-fight-to-persuade-shareholders\/","title":{"rendered":"Origin bidder digs in for a \u2018full-throated\u2019 fight to persuade shareholders"},"content":{"rendered":"

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The North American consortium Brookfield\/EIG is gearing up for a \u201cfull-throated\u201d fight to convince the bulk of Origin Energy shareholders to support the $20 billion deal, which is teetering on the edge of defeat as EIG revealed Origin\u2019s largest shareholder had talked of joining the bid it is now rejecting.<\/p>\n

Origin Energy\u2019s largest shareholder, AustralianSuper, had discussions with Brookfield and EIG about their $20 billion takeover of the energy giant as recently as last week, despite the super fund rejecting an early invitation to be part of the consortium.<\/p>\n

<\/p>\n

Brookfield and EIG sweetened their \u201cbest and final\u201d offer last week to $9.53 per share, valuing Origin at nearly $20 billion.<\/span>Credit: <\/span> <\/cite><\/p>\n

The latest twist in the country\u2019s largest corporate deal comes as AustralianSuper confirmed it had increased its ownership of the power giant, building its stake to 15.03 per cent.<\/p>\n

But the consortium has also upped the pressure on AusSuper, revealing a failed bid could lead to a plan B leaving the super fund stuck with shares in the natural gas assets it does not want while Brookfield walks away with the remaining assets.<\/p>\n

The two North American suitors sweetened their \u201cbest and final\u201d offer last week to $9.53 a share, valuing Origin at nearly $20 billion, a $1.2 billion boost that was swiftly rejected by AustralianSuper, which maintains the bid is still substantially below its estimate of Origin\u2019s long-term value.<\/p>\n

AustralianSuper confirmed on Monday it had increased its holding in the power company, picking up 21 million shares for $8.40 \u2013 compared with a bid price of $9.53 \u2013 the day after it rejected the consortium\u2019s latest offer.<\/p>\n

The super fund denied it was in discussions with Brookfield and EIG about joining their consortium, but the boss of global energy investor EIG, Blair Thomas, said discussions had taken place last week.<\/p>\n

\u201cThe initial conversations occurred within the first week of the scheme announcement. And, you know, there have been discussions as recently as last week,\u201d Thomas said.<\/p>\n

\u201cMy understanding is that there were separate conversations that took place with Brookfield.<\/p>\n

\u201cI personally spoke to them and offered them the opportunity to participate in the EIG side of the transaction. They declined that offer,\u201d Thomas said, adding this initial approach to AustralianSuper was made in March after Origin\u2019s board signed a binding scheme implementation deed supporting the takeover.<\/p>\n

AustralianSuper did not want to be part of a consortium bid for Origin Energy because it did not want the exposure to the power company\u2019s coal seam gas business, he said.<\/p>\n

\u2018We believe we can win, and we\u2019re pulling out all the stops to make that happen.\u2019<\/p>\n

Under the deal\u2019s terms, Canada\u2019s Brookfield will end up with Origin\u2019s power generation and retailing division, which supplies about 4.5 million customer accounts. MidOcean Energy \u2013 a liquefied natural gas company formed by US-based EIG \u2013 will acquire Origin\u2019s interest in a Queensland LNG joint venture, Australia Pacific LNG.<\/p>\n

AustralianSuper declined to comment further. The fund\u2019s statement says it will be voting against the takeover scheme when it is put to shareholders on November 23.<\/p>\n

\u201cAustralianSuper believes the ongoing energy transition, as we move towards net-zero by 2050,
has further enhanced the value of strategic energy transition platforms, such as Origin, whether
public or private,\u201d the fund said.<\/p>\n

Brookfield and EIG need 75 per cent of Origin\u2019s shareholders to approve their offer, a significant task as many shareholders often fail to vote in scheme deals.<\/p>\n

Thomas said the consortium had launched a shareholder blitz.<\/p>\n

\u201cWe believe we can win, and we\u2019re pulling out all the stops to make that happen. It\u2019s a full-throated campaign that\u2019s highly co-ordinated between the company and the consortium. We\u2019re going to make every effort to win that.\u201d<\/p>\n

He accused AustralianSuper of being opportunistic, adding the consortium had a plan B if it failed to win approval for the deal, which may involve a conditional takeover of the power giant.<\/p>\n

\u201cObviously, when you head into transactions like this big complicated M&A, there are always alternatives. There\u2019s a plan B, there\u2019s a plan C, and you know, we\u2019ve negotiated some flexibility into our scheme documents with the company. If necessary, we\u2019ll use that flexibility.\u201d<\/p>\n

Before the consortium\u2019s latest bid, analysts had been suggesting a bid closer to $10 might be needed to win over investors due to the independent expert\u2019s report suggesting Origin might be worth more than the earlier $8.91 offer.<\/p>\n

It is not just Origin investors with a lot at stake. Brookfield has pledged to spend up to $30 billion on green energy investments \u2013 far more than Origin could afford on its own \u2013 if the proposed takeover succeeds.<\/p>\n

If plan B eventuates, the structure of EIG and Brookfield\u2019s relationship means AustralianSuper risks being marooned in a listed Origin that is left with only the Australia Pacific LNG assets that it does not want. Thomas said EIG was the acquiring entity in the consortium, and the successful execution of plan B could mean EIG becomes the majority investor in a listed Origin, which would sell off the energy retail business and its power stations to Brookfield.<\/p>\n

Australia\u2019s competition watchdog has approved the takeover saying the public benefits outweigh competition concerns, but the deal still needs a green light from the Foreign Investment Review Board.<\/p>\n

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion.<\/i><\/b> Sign up to get it every weekday morning<\/i><\/b>.<\/i><\/b><\/p>\n

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