Origin Energy remains a public company after shareholders voted against a “best and final” offer from a consortium led by Brookfield Asset Management and EIG Partners.
The proposed A$18.7 billion ($12.5 billion; €11.5 billion) deal would have seen the Australian electricity generator and retailer taken private, with Brookfield’s $15 billion Global Transition Fund owning Origin’s energy markets business alongside GIC and Temasek while EIG’s MidOcean Energy took ownership of Origin’s stake in the Australia Pacific LNG project.
At a shareholder meeting in Sydney on Monday, 68.92 percent of shareholder votes cast were in favour of the takeover, which required 75 percent approval to proceed.
“As a result, Origin will continue as an independent ASX-listed company,” Origin chair Scott Perkins announced, to cheers from some assembled shareholders.
The vote ends, for now, the long-running saga of Brookfield and EIG’s bid that was first publicly disclosed in November 2022.
After the offer was revised upwards, Origin’s largest shareholder AustralianSuper came out strongly against the bid in multiple public statements and increased its shareholding to more than 17 percent. The superfund voted its stake against the proposed takeover.
Other recent developments saw Brookfield and EIG present a last-minute revised offer on 23 November, hours before shareholders were due to vote on their proposal. That revised offer included the potential for shareholders to reinvest in the delisted Brookfield-owned energy markets business after the completion of the scheme.
The consortium also put forward an alternative transaction should the scheme fail, involving the sale of the energy markets business to Brookfield for A$12.3 billion and a concurrent takeover bid by EIG for what remained of the publicly-listed Origin.
The scheme meeting was delayed until 4 December to allow shareholders time to consider the revised proposal and alternative transaction, with Origin’s board expressing its reservations about the alternative transaction’s complexity and concluding that its value would not adequately compensate shareholders.
However, the board still unanimously recommended that shareholders vote in favour of the scheme’s revised proposal.
At the meeting Monday, about 74 percent of issued share capital had cast votes on behalf of 35,300 shareholders. “This demonstrates that our shareholder base has been very engaged in this process,” Perkins said.
Differing views
Some shareholders asked at the meeting, prior to the vote, about Origin’s relationship with AustralianSuper, after the superfund repeatedly criticised the bid.
Perkins said that Origin had maintained a dialogue with AustralianSuper throughout the process and valued its backing as a shareholder.
AustralianSuper came out particularly strongly against the mooted alternative takeover proposal tabled on 23 November, with a spokesman accusing the consortium of buying more time: “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.”
Other shareholders expressed concern at the possibility of Origin falling into the hands of foreign owners, with one stating: “Origin’s paying very good dividends, and I’d like you to continue to do so. I’d like you to stay in my portfolio, and I can’t see any reason why you’d sell the company out so it’s overseas owned. We’re Aussies – we can do it.”
Perkins said issues of foreign ownership were up to the government to decide, while the Origin board focused on value for shareholders.
“We felt it was appropriate, remembering that the stock price of Origin was in the [mid-A$5 range] when we got our initial approach, that an offer at A$9 initially – and there have been several iterations of that since then – was an offer that deserved to be put to shareholders, for shareholders to make their own minds up.”
After Brookfield and EIG’s original offer in November 2022, the consortium entered into a scheme implementation deed with Origin Energy in March 2023 to acquire 100 percent of its shares, with the backing of the listed company’s board.
The consortium proposed a total consideration of A$8.912 per share, comprising A$5.78 per share and US$2.19 per share.
After several revisions – and AustralianSuper’s vocal opposition to the bid – the consortium came back on 2 November with a “best and final” proposal of A$9.53 per share, above the valuation of Origin’s independent expert.
The consortium then lobbed its alternative proposal on the day the shareholder vote was originally scheduled when it looked as if the vote would fail. That was not enough and shareholders rejected the scheme, against the board’s recommendation.
An AustralianSuper spokesperson welcomed the result of the vote, saying: “With the shareholder vote now finalised, we are looking forward to working with Origin’s board and executive team as they look to execute their strategy and ambition to lead Australia’s energy transition.
“AustralianSuper is a long-term investor in the Australian economy and is open to providing capital to assist Origin as it prepares to transition over the coming decades, while delivering on our purpose to help members achieve their best financial position in retirement.”
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