Brookfield submits new $10.6 billion proposal for Australia’s Origin Energy

By Scott Murdoch and Lewis Jackson

SYDNEY (Reuters) -Origin Energy, Australia’s biggest energy retailer, said on Thursday it had received a revised $10.6 billion takeover bid from a Brookfield-led consortium that would allow institutional investors to hold on to parts of the company.

A meeting in Sydney to vote on the original bid on Thursday has been delayed until Dec. 4 to consider the new offer, the company said.

Origin said based on the early votes received the original offer would not have won support.

The company’s biggest investor, Australian Super, which has a 16.5% stake in Origin, said it would vote no to the original offer, which it believed substantially undervalued the company’s ability to profit from the shift to renewable energy. The pension fund declined to comment on the revised Brookfield-led offer.

Under the new terms, the A$9.43 per share bid remains but some investors can stay invested in the energy markets business that would be owned by Brookfield.

Brookfield’s consortium partner EIG Partners would take on Origin’s integrated gas business which includes the 27.5% stake in Australia Pacific LNG (APLNG).

If that bid fails to achieve 75% shareholder support, an alternative proposal has been lodged that would see Origin sell the energy markets business to Brookfield for A$12.3 billion ($8 billion).

In that case, EIG would make an off-market takeover offer for the rest of Origin, which would centre on the APLNG stake.

Origin shareholders would receive a total of A$9.08 per share, with an additional A$0.22 if EIG got up to 90.1% control of Origin.

Origin’s shares rose after the announcement, last at A$8.56, up 1.78%, but still well below the offer prices.

Origin’s board has yet to give an official recommendation on the alternative proposal but said “the transaction appears inferior to the existing scheme,” citing its complexity and potentially adverse tax outcomes for the company and investors.

The Brookfield consortium’s early November offer of A$6.59 and $1.86 in cash and a A$0.39 special dividend equated to A$9.53 per share, but foreign exchange volatility has pushed that down to the current level.

Institutional investors who have already voted on the A$9.43 offer can choose to change or keep their vote, or opt to invest in the energy markets business.

The altered deal structure came as Energy Minister Chris Bowen on Thursday said Australia would increase spending to lure investment in 32 gigawatts of new power capacity, equivalent to half the national electricity market’s existing capacity.

In a statement, Origin said the exact implications on its business from the government’s “meaningful intervention” into the market remained uncertain, and investors should be given time to consider the potential impacts.

($1 = 1.5366 Australian dollars)

(Reporting by Scott Murdoch and Lewis Jackson; Editing by Miral Fahmy, Lincoln Feast and Sonali Paul)