The board of ASX-listed Origin on Thursday announced it plans to “unanimously recommend” that shareholders vote in favour of an $18.4 billion takeover bid from a consortium comprising Canada’s Brookfield Asset Management and United States-based gas supplier MidOcean Energy. The $9-a-share cash offer represents a near 55% premium on the energy gen-tailer’s closing price of $5.81 on Wednesday.
Origin said it will open its books to the consortium of Brookfield and MidOcean Energy, which is managed by United States-headquartered energy infrastructure investment giant EIG, with “due diligence expected to complete within eight weeks.”
“Should Origin receive any proposals which the board considers may lead to a superior outcome for Origin shareholders, these will be evaluated,” Origin said in a statement.
Origin chairman Scott Perkins said the proposal, which comes after an initial approach in early August of $7.95 a share, “confirms that Origin, its operations and management team represent a highly strategic platform, well-placed to benefit from the energy transition”.
“Our confidence in Origin’s prospects underscored our engagement with the consortium and delivered a material increase on their initial offer,” he said. “While the due diligence process advances, we will remain focussed on the successful execution of our strategy.”
Origin’s business includes electricity generation, power and gas retailing and a 27.5% a stake in liquefied natural gas joint venture, Australia Pacific LNG.
Under the proposal, the bidding partners would split the business, with Brookfield taking Origin’s energy generation and retailing businesses while MidOcean would acquire Origin’s gas business, including its interest in Australia Pacific LNG.
Brookfield said if the proposal is successful, it would invest an additional $20 billion in Origin to fund its clean energy transition plan and build renewable energy and firming generation capacity through to 2030.
Brookfield’s Asia Pacific chief executive Stewart Upson said the energy transition in Australia presented a “once-in-a-generation” investment opportunity “but that investment needs to be accelerated materially in order to meet Australia’s legislated climate goals.”
“Origin is a very high-quality business with a strong management team that, when combined with Brookfield’s large-scale capital and global renewable power development expertise, is uniquely placed to contribute significantly to Australia’s net zero targets,” he said.
“Brookfield has the global renewable power expertise and access to capital to support Origin’s transition strategy. Our business plan includes additional investment of $20 billion by 2030 to build the required renewable capacity and storage and position Origin as Australia’s leading ‘greentailer’.”
The bid comes after Brookfield earlier this year was part of an unsuccessful offer to buy Australian energy giant AGL for $8 billion, which came with a pledge to spend a further $10 billion to $20 billion building large-scale renewable energy to fast-track the closure of the company’s coal-fired power stations.
Origin chief executive Frank Calabria said the takeover bid, which would rank among the biggest private-equity-backed buyouts of an Australian company, comes after Origin made several strategic moves in the past year that have strengthened its balance sheet, sharpened its strategic focus and “positioned the company to prosper from the energy transition.”
“We believe Origin is in a strong position to lead the energy transition, capture opportunities and create value for shareholders,” he said.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: email@example.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.