Brookfield-Led consortium revises offer for Origin Energy

A Brookfield-led consortium has submitted a revised non-binding offer worth A$19.1bn ($12.5bn) for Australian energy company Origin, the Australian company said on November 23. The revised proposal came on November 22, just a day before a shareholder vote on the original bid, which has now been postponed to December 4.

Brookfield is looking to acquire Origin's energy markets business and MidOcean, a unit of EIG, would acquire the integrated gas business including a 27.5% interest in Queensland-based Australia Pacific LNG (APLNG). APLNG is the largest producer of coalbed methane in Australia and supplies gas to Queensland's domestic gas market, while also processing CBM into LNG for exports.

Under the revised proposal, institutional shareholders would have the opportunity to reinvest in Brookfield's energy markets business after the deal's completion. Additionally, if the deal is rejected, an alternative transaction option has been included, which involves selling Origin's energy markets business to Brookfield for A$12.3bn, followed by an off-market takeover offer by EIG for the LNG business, subject to a minimum acceptance condition of 50.1%.

In the case of the alternative transaction proceeds, shareholders would receive a total cash consideration of about $9.082/Origin share.

Origin's board has expressed concerns about the complexity, conditionality, and differing value of the revised proposal compared to the original bid. The board has also highlighted potential adverse tax implications for Origin and its shareholders under the revised proposal. Despite these reservations, the board acknowledges its responsibility to fully evaluate the revised proposal and provide an informed opinion to shareholders.

AustralianSuper, Origin Energy's largest shareholder, has stated its intention to vote against the latest offer. 

"This latest low-ball offer strengthens AustralianSuper’s view that the offer remains substantially below our estimate of Origin’s long-term value. AustralianSuper is resolute the value and future value of Origin is better in the hands of AustralianSuper members and other shareholders than a private equity consortium planning to shortchange them," it said.

"We agree with the Origin board’s position that it has “significant reservations as to the complexity, conditionality and differing value and potential adverse tax outcomes to Origin and shareholders”," it added.

AustralianSuper said that the ongoing energy transition has further enhanced the value of strategic energy transition platforms, such as Origin.