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Brookfield consortium cuts offer for Australia’s Origin Energy to US$10.5-billlion

Reuters - Tue Feb 21, 2023

Australia’s Origin Energy Ltd OGFGF said on Wednesday a Brookfield-led consortium had cut its takeover bid from $A9 to A$8.90 per share, valuing the company at A$15.33 billion (US$10.50 billion).

The previous offer tabled in November at the higher price valued Origin A$15.5 billion.

The parties did not spell out the reason for the drop in price. Australian gas firms have seen their valuations hit by the government’s planned 12-month cap on gas and coal prices to keep a lid on bills for households and businesses hit by soaring global energy prices following Russia’s invasion of Ukraine.

Origin shares have traded well below the original offer price and on Tuesday closed at A$7.01 as investors speculated a deal might not go ahead.

The Origin board stopped short of delivering a recommendation of support for the bid, which is one of the conditions needed for the Brookfield offer to proceed. “The Origin board considers the revised proposal has the potential to deliver significant value to shareholders, and accordingly, intends to continue to progress discussions with the consortium,” the energy retailer said.

Under the plan, Brookfield Asset Management BAM-T would acquire Origin’s energy markets business, while MidOcean Energy, the other consortium partner which is backed by energy investment firm EIG, would take control of Origin’s integrated gas business, including its 27.5% stake in Australia Pacific LNG (APLNG).

The revised offer comprises A$8.90 apiece for the first 100,000 Origin shares. For any stake above, shareholders will receive a combination of A$4.334 and a U.S. dollar payment of $3.194 per share that reflects Origin’s interest in APLNG.

“Brookfield is committed to investing in the energy transition in Australia and we see Origin playing a leading role in helping Australia meet its legislated climate and energy goals,” Brookfield Asia Pacific chief executive Stewart Upson said in a statement.

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