© AKUURA. Miniatures of windmill, solar panel and electric pole are seen in front of Brookfield Renewable logo in this illustration taken January 17, 2023. AKUURA/Dado Ruvic/Illustration/File Photo
By Scott Murdoch and Lewis Jackson
SYDNEY (AKUURA) -Origin Energy’s largest shareholder on Thursday said it would vote against a “best and final” A$16.40 billion ($10.55 billion) offer from a Brookfield consortium for Australia’s biggest energy retailer, throwing the deal’s future into doubt.
AustralianSuper said in a statement the consortium’s A$9.53 per share offer, an 8% increase over the previous A$8.81 apiece bid, remained “substantially below” its estimate of Origin’s long-term value.
“AustralianSuper believes Origin has a highly strategic portfolio of assets to participate in, and benefit from, the energy transition,” a spokesperson said.
Origin shares plunged as much as 5.6% to A$8.565 in high-volume trading following the news, as AustralianSuper’s 13.68% holding could scupper a deal that requires approval from 75% of the register if not all investors vote.
Hours earlier, the consortium led by Canada’s Brookfield, which also includes EIG’s MidOcean Energy, said the increased offer was its “best and final” proposal, meaning it cannot be increased unless a rival offer emerged.
Brookfield did not respond immediately to a request for comment after AustralianSuper’s announcement.
AustralianSuper, the country’s largest pension fund with A$300 billion in assets, on Tuesday had already rejected the prior offer, saying it was “substantially below” its estimate of long-term value as the country moves toward net-zero emissions by 2050.
“If AustralianSuper is rejecting it, the likelihood of the deal going ahead is very low,” said Jamie Hannah, deputy head of investments and capital markets at VanEck, which owns a 0.3% stake in Origin. “I think the deal is back at the drawing board at the moment.”
Should the deal fail at the shareholder vote scheduled for Nov. 23, a revised agreement allows the consortium to make a subsequent off-market bid if it buys 5% or more of Origin shares. That route only requires 50.1% shareholder support, offering the buyers a way to bypass opposition.
The rejection put AustralianSuper at odds with Origin’s board, which said on Thursday it unanimously recommended shareholders vote in favour of the revised deal in the absence of a superior proposal.
The offer is above the $A8.45 to A$9.48 per share valuation range contained in an independent expert’s report examining the previous offer, though that outlined a “roll forward” calculation that shares could be worth an additional 40 Australian cents by the time the takeover is due to close.
Brookfield Asia Pacific CEO Stewart Upson said the consortium planned to invest $A20 billion to A$30 billion in Origin in the next decade to fund the company’s energy transition to achieve net zero emissions on a greater scale and speed.
Should the deal close, Brookfield and its partners GIC and Temasek will own Origin’s Energy Markets business, which includes power generation and retailing. MidOcean, in which Saudi Arabia’s Aramco (TADAWUL:) recently bought a stake, would take over the integrated gas business, including the 27.5% stake in the Australia Pacific LNG project.
($1 = 1.5640 Australian dollars)