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Origin Energy’s OGFGF top shareholder said on Thursday it would reject a complex new offer by a Brookfield-led consortium to buy Australia’s biggest energy retailer made after it became clear investors would vote down an earlier US$10.6-billion bid.

A meeting of Origin shareholders in Sydney to vote on the original bid on Thursday was delayed until Dec. 4 to consider the new offer, which would allow institutional investors to hold on to parts of the company.

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 company’s biggest investor, AustralianSuper, which owns more than 17 per cent of Origin, said in a statement that the “latest lowball offer” strengthens its view that the offer remains substantially below Origin’s long-term value.

The 300-billion Australian dollar ($269-billion) pension fund was against the original offer, which it also said substantially undervalued the company’s ability to profit from Australia’s shift to renewable energy.

Brookfield in a statement reiterated its plans to invest up to 30 billion Australian dollars to lower Origin’s carbon footprint and contribute meaningfully to Australia’s emissions-reduction targets.

The unprecedented fight over Australia’s second-largest power generator highlights how large investors want exposure to the decades-long renewable energy transition despite the challenge of valuing assets in a sector subject to government intervention.

Under the new terms offered by Brookfield, the bid of 9.43 Australian dollars a share 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-per-cent stake in Australia Pacific LNG (APLNG).

If that bid fails to achieve 75-per-cent shareholder support, an alternative proposal has been lodged that would see Origin sell the energy markets business to Brookfield for 12.3 billion Australian dollars.

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 9.08 Australian dollars a share, or US$10.2-billion in total, with an additional 22 Australian cents a share if EIG got up to 90.1-per-cent control of Origin.

Origin shares were trading 1.1 per cent lower at 8.33 Australian dollars at the close of trade on Thursday.

When asked during a news conference if he had reservations about the revised deal, chairman Scott Perkins said: “Absolutely.”

After the announcement of the revised offer, EIG chief executive Blair Thomas told Reuters that he was done talking to AustralianSuper.

“What is frustrating is no point in time have they said what they would find acceptable,” he said in the interview.

“We are going to provide an alternative where the majority of shareholders can control their own destiny,” he added.

The Brookfield consortium’s early November offer of 6.59 Australian dollars and US$1.86 in cash and a 39-Australian-cent special dividend equated to 9.53 Australian dollars a share, but foreign-exchange volatility has pushed that down to the current level.

Fund manager Allan Gray, which owns about 3 per cent of Origin shares, supported the renewed offer, managing director Simon Mawhinney said.

If the board recommends the alternative transaction, the consortium should be able to get the 50.1 per cent votes required, he said, forcing opponents to choose between supporting the updated scheme or risking being left holding a rump Origin shorn of its energy markets business.

“Those opposed to the scheme previously will find themselves between a rock and a hard place,” Mr. Mawhinney said.

But if the board withheld support then it would be very unlikely to get the required votes, he added.

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 the 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 effects.

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