Brookfield has claimed AustralianSuper is obstructing the energy transition process by rejecting its $20 billion improved offer for Origin Energy (ASX: ORG). It has also warned that if shareholders fail to approve the deal it might later be able to acquire the company for a lower price.
The Toronto-based asset manager, and its US-based partner, oil and gas-focused EIG, raised their offer 8% to $9.53 a share and declared it final on 2 November. AustralianSuper, Origin’s largest shareholder, responded saying it remained opposed to the deal which it said undervalued the company.
Despite Origin’s board agreeing to the earlier offer, without AustralianSuper’s backing, the scheme of arrangement deal will be struggling to get the necessary 75% acceptance when it is put to a shareholder vote on 23 November. AustralianSuper owns 13.7% of Origin and was believed to be seeking to buy more shares after the ASX closed on 2 November.
AustralianSuper’s rejection of the improved bid sent Origin shares down 6.6% to $8.47.
Head of Brookfield’s renewable power and transition group in Australia Luke Edwards issued a warning to Origin shareholders. He said they could “either accept the largest premium paid in a listed market transaction in the last decade, and take a positive step to accelerate Australia’s transition to net zero, or accept the status quo, which is risky, and an uncertain future for the transition and the value of their investment in Origin”.
He said a no vote would send the share price down and would give the bidders the opportunity to come back with a lower offer.
As part of their agreement to increase their offer, Brookfield and EIG negotiated an option that if their bid failed they could return with a new off-market takeover offer. This option includes a clause that the new offer would be subject to 50.1% of shareholders accepting the deal. This would significantly reduce AustralianSuper’s influence.
Lifting the bid from $8.81 to $9.53 a share has taken the offer just above the valuation range of $8.45 to $9.48 a share which Grant Samuel, the independent expert appointed by Origin, put on the company, as at 30 June.
Brookfield has said that if it acquires Origin it will invest $20-$30 billion in the company over the next ten years to develop clean energy generation and storage. EIG is to acquire Origin’s natural gas assets under the deal.