EIG Partners, led by Blair Thomas, expressed confidence that the Brookfield-EIG consortium would be successful in its $10.5 billion bid to acquire Origin Energy. This statement comes as AustralianSuper, the pension fund, announced that it had increased its stake in Origin to 15.03%, while claiming that the offer of A$9.53 per share remained “significantly” below its estimate of long-term value.
Increase in AustralianSuper shareholding
Origin shares were up 1.13% at A$8.47 in late trading on Monday, well below the revised offer price. The company will hold a shareholders’ meeting on November 23, where it will encourage investors to vote in favor of the agreement. Seventy-five percent of votes are required to approve the operation.
Consequences of approval or rejection
If the deal goes through, Brookfield will take control of Origin’s energy markets division, while EIG’s MidOcean Energy will acquire a 27.5% stake in Australia Pacific LNG (APLNG). Blair Thomas, CEO of EIG Partners, said in a telephone interview with Reuters, “If you take their words seriously that they think the company is worth a lot more, particularly the energy markets part, I think they could either participate in the private energy markets transaction and stay invested, or make their own offer for the whole company.”
Thomas added: “Make an offer if you feel that strongly about it. We’ve had that for over a year and no competing offers have come in.” AustralianSuper declined to comment. The pension fund had previously stated that it was not in discussions to join the Brookfield-EIG consortium. Thomas confirmed that Brookfield and EIG had discussed with AustralianSuper the possibility of its participation in the agreement earlier this year.
Contingency Plan and Implications of a Rejection of the Offer
Should the shareholder vote fail, the Brookfield-led consortium announced last week that it had a contingency plan for an off-market acquisition that would require the minimum acceptance of 50.1% of the register and give control of Origin’s board. Origin’s Board of Directors has approved the consortium’s current offer, which represents a 76.7% premium to the company’s one-month volume-weighted average price in November 2022, the date of the first offer.
A rejection of supply, Thomas believes, could affect foreign investor sentiment and change the way foreign buyers value Australian assets. He said, “Unfortunately, I think it affects the way foreign investors will look at Australia. If a 76% premium isn’t enough to get support, you have to wonder what would be.”
Ultimately, Origin Energy’s future depends on the shareholders’ vote at the Annual General Meeting on November 23. The Brookfield-EIG consortium remains confident in its bid, but AustralianSuper’s opposition adds a dose of uncertainty to this important transaction.
