Origin Energy on Thursday adjourned its scheme meeting until 4 December to consider the new offer after the consortium comprising Canadian investment giant Brookfield and American investor EIG Partners proposed an alternative to its existing multi-billion takeover bid.
The consortium has previously said its bid at $9.43 a share was its “best and final” offer but the proposal has come under fire with Origin’s largest shareholder, superannuation giant AustralianSuper saying the proposal substantially undervalues the utility’s long-term value.
Origin said ahead of Thursday’s planned meeting that based on proxy results received, it was unlikely the original offer would have achieved the required 75% approval by shareholders.
Under the new proposal, the $9.43 per share bid remains but shareholders would have the right to reinvest into the energy markets business that would be owned by Brookfield. EIG would take on Origin’s integrated gas business which includes the 27.5% stake in Australia Pacific LNG.
If the scheme isn’t approved, the new proposal has the option that would see Origin sell the energy markets business to Brookfield for $12.3 billion ($8 billion) and EIG making an off-market takeover offer for its LNG business that would only need the acceptance of 50.1% of shareholders to succeed.
If this alternative transaction proceeds, Origin shareholders would receive $9.08 per share and an additional $0.22 if EIG gets at least 90% acceptance of its takeover proposal.
Origin’s board said in a statement that while the alternative transaction may present an additional opportunity for shareholders to receive cash value for their shares, it appeared “inferior” to the existing scheme.
“The board has significant reservations as to the complexity, conditionality and differing value, and potential adverse tax outcomes to Origin and shareholders, nevertheless the board has a responsibility to fully assess this revised proposal, so it can provide an informed view about its merits or otherwise to shareholders,” Origin said.
Origin also noted that the federal government’s announcement that it intends to expand its Capacity Investment Scheme (CIS) to deliver 9 GW of dispatchable capacity and 23 GW of variable capacity nationally could impact on the utility’s market share.
“This represents a potential source of significant new generation supply into, and a meaningful intervention in, the National Electricity Market,” it said.
“While the impacts on Origin of the expanded CIS cannot be determined at this point, the board has concluded that shareholders should be given the opportunity to consider this development in the context of the scheme.”
Origin said the rescheduled scheme meeting will now be held 4 December 2023.
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