Investors Expected to Reject Brookfield’s $10.6 Billion Bid for Australia’s Origin Energy
SYDNEY – In a blow to a Brookfield-led consortium, investors are anticipated to vote against the consortium’s A$16.3 billion ($10.61 billion) bid for Origin Energy, Australia’s largest energy retailer, at an upcoming investor meeting on Thursday. The largest shareholder, Australian Super, which holds a 16.5% stake in Origin, has already expressed its intention to vote against the offer, stating that it undervalues the company’s potential profits from the renewable energy transition. Without Australian Super’s support, the consortium faces a challenging path to securing the necessary level of backing required under local takeover laws.
Proxy votes, which were due to be submitted on Tuesday, indicate that major institutional investors have already made their decisions. However, a shareholder meeting is scheduled to take place in Sydney on Thursday at 0300 GMT to finalize the outcome. If successful, the deal would be the second-largest buyout in Australia in 2023, following Newmont Corp’s $17.8 billion acquisition of Newcrest Mining.
Despite Origin Energy’s shares closing at A$8.42 on Wednesday, up 1.69%, the price remains significantly below the offer price of A$9.43 per share.
Brookfield Corp and its partner EIG Partner’s MidOcean Energy have presented Origin shareholders with a combination of A$6.59 and $1.86 in cash, along with a special dividend of A39c. However, due to foreign exchange volatility, the bid has depreciated from A$9.53 per share to its current level.
The subdued share price suggests that investors doubt the deal will be completed, according to Jamie Hannah, Deputy Head of Investments and Capital Markets at VanEck Australia, who voted in support of the proposal. He stated, I’m not confident of it going ahead. As much as we’ve voted for it, I don’t know if the numbers stack up. If everyone thought it was going ahead, the share price would be higher.
Brookfield and Origin Energy declined to comment on the upcoming vote.
The share price of Origin Energy has consistently traded below the offer price since the new bid was announced, indicating investor skepticism about its success.
Macquarie analyst Ian Myles noted, With Australian Super’s stake in Origin increasing to 16.5%, it is highly likely that the EIG/Brookfield scheme will fail.
($1 = 1.5366 Australian dollars)
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