Origin gives Brookfield more time to close A$18.4bn takeover deal
Australian energy retailer Origin Energy has granted a consortium led by Canadian fund managers Brookfield Asset Management more time to close the A$18.4bn ($12.8bn) deal to buy the company, it said on January 17.
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. 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).
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“The consortium has advised that it is working to complete its due diligence and has requested additional time to do so,” Origin said in a stock exchange filing. “In accordance with Origin’s exclusivity arrangements with the consortium, exclusivity will end on 24 January 2023. At this stage, shareholders do not need to take any action.”
Origin had last month granted the bidders an extension on their exclusive period. This is the second extension.
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.
Meanwhile, the recent decision by the Australian government to cap gas prices for a year has caused some unease in the industry. What is really bothering the industry is the mandatory code of conduct, the scope of which is yet to be developed.
“Without more details on the mandatory code of conduct, it is too early to suggest an exodus of upstream investment. However, in an environment already gripped by long-term demand uncertainty, convoluted regulations could discourage producers from proceeding with major capital expenditure (capex) decisions,” Rystad Energy said in a note last month.