Origin gets A$18bn takeover offer from Brookfield
Australia’s Origin Energy has received a A$18.4bn ($11.8bn) takeover proposal from a consortium led by Canadian fund managers Brookfield Asset Management, the company said on November 10.
Brookfield in partnership with MidOcean Energy, an LNG company formed and managed by EIG, plans to acquire all the issued shares in Origin at a price of A$9/share.
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Origin said its board intends to grant the consortium the opportunity to conduct due diligence to enable it to put forward a binding proposal.
“Due diligence is expected to complete within eight weeks,” the company said. “Should Origin receive any proposals which the board considers may lead to a superior outcome for Origin shareholders, these will be evaluated.”
Origin said the current offer follows an earlier proposal of $7.95/share on August 8. On September 18, the consortium made a further offer of $8.70-8.90/share, before the company agreed to participate in talks that led to the $9/share bid.
“Based on current information and market conditions, if the consortium makes a binding offer at $9 cash per share, then it is the current intention of the Origin board to unanimously recommend that shareholders vote in favour of the proposal, in the absence of a superior proposal,” Origin said.
As per the offer, Brookfield would acquire Origin’s energy markets business and MidOcean would acquire the integrated gas business including a 27.5% interest in Queensland-based Australia Pacific LNG (APLNG).
Origin is one of the biggest utilities in Australia and is involved in power generation and distribution and gas retailing. It also has a stake in APLNG, a joint venture comprising Origin, ConocoPhillips and China's Sinopec. APLNG is the largest producer of coalbed methane and supplies gas to Queensland’s domestic gas market, while also processing CBM into LNG for exports.
Origin recently divested its interest in the Northern Territory’s Beetaloo basin and said it will exit its upstream exploration permits not related to APLNG. EIG in October last year tried to buy a stake in APLNG but the deal was blocked by ConocoPhillips.
“Over the past year, Origin has executed a number of important strategic initiatives that have strengthened the balance sheet, sharpened our strategic focus and positioned the company to prosper from the energy transition,” CEO Frank Calabria said.
Brookfield in a separate statement said its transition business plan includes the investment of an additional A$20bn in Origin to help fund its transition strategy and build renewable and firming capacity over the period to 2030.
"Origin is a very high-quality business with a strong management team that, when combined with Brookfield’s large-scale capital and global renewable power development expertise, is uniquely placed to contribute significantly to Australia’s net zero targets," said Stewart Upson, Asia Pacific CEO, Brookfield.
Brookfield’s investment would be led by the Brookfield Global Transition Fund, a fund dedicated to the energy transition, alongside institutional partners.
"Origin’s integrated gas business—which would build on MidOcean’s existing investment in Australia—will help enable broader decarbonisation efforts in the region by supplying critical natural gas and LNG to the domestic and global markets for decades to come," said De la Rey Venter, CEO, MidOcean Energy.