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An influential shareholder advisory firm has backed North American consortium Brookfield and EIG\u2019s takeover of power giant Origin Energy. It\u2019s the first group to favour the $20 billion bid even as major shareholder AustralianSuper doubles down on its opposition.<\/p>\n
Brookfield and EIG are locked in a full-throated fight to sway shareholders in favour of their bid for the Australian power retailer and generator, rolling out a proxy solicitation blitz aimed at mustering mum-and-dad stockholders to accept their \u201cbest and final\u201d offer lobbed last week at $9.53 a share.<\/p>\n
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Brookfield says it will spend up to $30 billion on renewable energy if it gets control of Origin.<\/span>Credit: <\/span> <\/cite><\/p>\n The consortium\u2019s revised offer was at an 8 per cent premium to the $8.81 per share cash payment outlined in a scheme agreement backed by Origin\u2019s board in March and above an independent expert\u2019s valuation range of $8.45 to $9.48 per share at the end of June.<\/p>\n Positive support from proxy advisors \u2013 firms that provide research and voting advice for large and small investors \u2013 will be crucial to the consortium\u2019s bid, which is teetering on the edge of defeat after Origin\u2019s largest investor, AustralianSuper, expanded it stake to 15.03 per cent this week and dismissed the offer.<\/p>\n AustralianSuper insists the bid is still substantially below its estimate of Origin\u2019s long-term value.<\/p>\n However, proxy advisor ISS has now backed the deal, saying Brookfield and EIG\u2019s initial tilt at Origin came during a time when the power firm was weakened by volatile energy markets. The latest offer was at \u201cleast at the bottom of a reasonable range of fair values and includes a reasonable premium to the stock price absent a takeover,\u201d ISS told its investor clients.<\/p>\n \u201cThe transaction offers shareholders a cash exit at a premium in exchange for surrendering the pay-off of a potential successful energy transition for the company,\u201d the proxy advisor explained.<\/p>\n \u201cThe company has a strong market position and potential funding to finance such a transition, though energy price volatility, regulatory uncertainty and large project execution make the payout rather uncertain. It is the company\u2019s structure and exposure to many key variables outside its control that has caused volatility in cash flows, led to the board to recommend the offer and caused debate around valuation.\u201d<\/p>\n Under the deal\u2019s terms, Canada\u2019s Brookfield will end up with Origin\u2019s power generation and retailing division, which supplies about 4.5 million customer accounts. MidOcean Energy \u2013 a liquefied natural gas company formed by US-based EIG \u2013 will acquire Origin\u2019s interest in a Queensland LNG joint venture, Australia Pacific LNG.<\/p>\n A consortium spokesperson said that momentum was \u201cclearly building behind our compelling $9.53 per share offer to Origin shareholders\u201d.<\/p>\n \u201cIn addition to the favourable investor feedback we have received, today\u2019s ISS recommendation represents another independent voice that supports accepting the compelling and certain value we have offered,\u201d they said.<\/p>\n ISS said Brookfield and EIG\u2019s new bid price was not based on cash flows at a weak part of the cycle, but rather on normal earnings from Origin\u2019s energy markets business, peak earnings at its APLNG arm, and on a dramatic surge in income from Octopus Energy business in Europe.<\/p>\n The Market Recap newsletter is a wrap of the day\u2019s trading. <\/i><\/b>Get it each weekday afternoon<\/i><\/b>.<\/i><\/b><\/p>\nMost Viewed in Business<\/h2>\n
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