The shareholder vote on a takeover bid for Origin Energy has been pushed out by nearly two weeks, the gentailer has advised, following the eleventh-hour submission of a revised proposal from the consortium led by global funds giant Brookfield Asset Management.
The change of plans was confirmed by Origin on Thursday, just hours before a shareholder vote was to have taken place. The deferral of the meeting, it says, will “allow time to consider the Revised Proposal and other relevant matters.”
Origin also confirmed the broadly held view that the Brookfield bid, as it stood before the revised proposal, was destined to fail.
“Based on the proxy votes received to date, had the Scheme Meeting proceeded today, it is unlikely that the Scheme would have achieved the required 75 per cent approval by shareholders,” a company statement to the ASX said.
The original proposal was for Brookfield to join forces with Singapore funds GIC and Temasek to take control of Origin’s utility business. Origin’s LNG business would then be held by the US-based MidOcean Energy.
The latest two-part proposal, submitted on Wednesday night, offers roughly the same price per share as currently proposed, at $9.43, but with the option for institutional shareholders to re-invest into the Brookfield owned Energy Markets business after the takeover.
An alternative proposal, should the first fall through, is a bid for Origin’s Energy Markets (including Origin’s share of Octopus Energy) valued at $12.3 billion, with a subsequent off-market takeover offer by EIG for Origin.
For its part, the Origin board notes that “while the alternative transaction may present an additional opportunity for shareholders to receive cash value for their shares… the transaction appears inferior to the existing scheme.
“The board has significant reservations as to the complexity, conditionality and differing value, and potential adverse tax outcomes to Origin and shareholders.”
The gentailer’s board also stresses the need for shareholders to consider the huge news from the federal government, also unveiled on Wednesday night, that it will dramatically expand the Capacity Investment Scheme (CIS) to fast-track Australia’s shift to 82 per cent renewables.
“This represents a potential source of significant new generation supply into, and a meaningful intervention in, the National Electricity Market,” the Origin notice says.
“While the impacts on Origin of the expanded CIS cannot be determined at this point, the board has concluded that shareholders should be given the opportunity to consider this development in the context of the Scheme.”
Origin had planned to build only around 4 GW of new capacity, despite its intention to close the Eraring coal generator as early as August, 2025, while Brookfield promised to spend up to $30 billion to build 14GW of new wind, solar and storage over the coming decade.
But it could be that Origin may now see Government underwriting as a means to increase its planned investment.
