Origin board rejects Brookfield Plan B offer, with main bid doomed for failure

Origin Energy has rejected a revised takeover bid from Brookfield and EIG Partners and asked shareholders to vote on the consortium’s previous offer, despite conceding just a week ago that the $9.49 scheme was doomed to failure.

In a statement to the ASX on Thursday, the Origin board said the revised proposal, lobbed into play the night before a shareholder vote was to have taken place last Thursday, was “not in the best interests” of the gentailer or its shareholders.

“The Revised Proposal is incomplete, complex, highly conditional, and does not provide sufficient certainty for Origin shareholders,” a statement said.

“It is also the Board’s view that the value of the Revised Proposal does not adequately compensate shareholders, including taking into account the extended timeline that the Revised Proposal would require.

“Further, it would require Origin to accept continuing constraints on the business following an already lengthy period for the current Scheme.”

The ruling means shareholders will now vote on Monday (December 4) on the consortium’s board-approved $18.7 billion offer.

This does not bode well for Brookfield, considering Origin’s observation last week that the $18.7 billion bid was looking likely to be voted down.

“Based on the proxy votes received to date, had the Scheme Meeting proceeded today, it is unlikely that the Scheme would have achieved the required 75 per cent approval by shareholders,” a company statement to the ASX said last Thursday.

Leading the no-votes has been AustralianSuper, which has notched its shareholding in Origin up to more than 17 per cent since Brookfield made its first play for the gentailer.

Origin says that if shareholders vote no to the offer on Monday, then the company will get on with its “strategy and ambition to lead the energy transition in Australia,” while also remaining open to strategic options that might enhance shareholder value.

It may be that last week’s huge energy policy news from the federal government, lobbed into the mix at the same time as the revised offer, has given the board a clearer view on how it might execute this “strategy and ambition,” with the help of a dramatically expanded Capacity Investment Scheme.

“This represents a potential source of significant new generation supply into, and a meaningful intervention in, the National Electricity Market,” Origin said last week about the Albanese government’s CIS plans.

“While the impacts on Origin of the expanded CIS cannot be determined at this point, the board has concluded that shareholders should be given the opportunity to consider this development in the context of the Scheme.”

Brookfield, which had vowed to spend $30 billion on 14 GW of new wind, solar and storage capacity – more than three times Origin’s intentions – declined to comment.