Market MoversOn the Rise Canada’s Brookfield Asset Management Inc. soared on news it is leading a consortium in a US$11.8-billion buyout offer for Origin Energy Ltd, Australia’s no.2 power producer and energy retailer.
If successful, the takeover would rank as one of the biggest private equity-backed buyouts of an Australian company, and would be the largest deal in the country this year, Refinitiv data shows.
Brookfield and its partner MidOcean Energy, backed by private equity firm EIG, both said they see big opportunities in Australia to invest in the transition to cleaner energy, and see Origin’s assets as the way to get in.
“Together, Brookfield and Origin can support Australia’s multi-decade transition journey and accelerate our progress towards its emissions-reduction targets,” Brookfield’s Asia Pacific Chief Executive Officer Stewart Upson said in a statement.
The deal requires Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB) approval to proceed.
Origin opened its books to the consortium after it raised its offer to A$9 per share in cash, a near 55-per-cent premium to Origin’s last close of A$5.81. The company said it would recommend shareholders vote in favor of the proposal if no higher bid emerges.
“It’s a knockout offer in terms of price, a 55-per-cent premium,” said Andy Forster, senior investment officer at Argo Investments, Origin’s sixth largest shareholder, according to Refinitiv.
“There’s a bit of uncertainty around government intervention and what that means in terms of energy markets. It’s a short term uncertainty - but they’re obviously taking a long term view.”