Divide and conquer: Brookfield to split Origin in two if $18 billion bid succeeds

A consortium backed by Brookfield has made a $9 a share offer for energy giant Origin, valuing the company at $18.4 billion.

Nov 10, 2022, updated Nov 10, 2022
Origin has boosted its earnings outlook (Pic: Supplied)

Origin has boosted its earnings outlook (Pic: Supplied)

The current share price for Origin is $5.81, so the offer is at a 54.9 per cent premium. Origin’s shares opened strongly this morning with a rise of 33 per cent to $7.76.

Origin said the offer from Brookfield and MidOcean Energy was indicative and followed an earlier offer at $7.95 a share and another at $8.70.

It is the second energy company in play after attempts by Mike Cannon-Brookes took an 11 per cent stake in AGL and has now pushing for four director seats on the board. His aborted attempt at AGL was to be largely funded by Brookfield.

If the bid was successful, Origin would be split in two. Brookfield would take Origin’s energy markets business and MidOcean would assume the integrated gas business which included a stake in the APLNG project at Curtis Island, near Gladstone.

“Considering all the relevant factors, Origin has entered into a confidentiality and exclusivity agreement with the consortium,” Origin told investors today.

“Under the terms of the agreement, either party can terminate the exclusivity provisions after five weeks and four days with one week’s notice.

“The board intends to grant the consortium the opportunity to conduct due diligence to enable it to put forward a binding proposal.”

It said the due diligence would take eight weeks and Origin said if there was a binding bid at $9 a share, and there was no superior offer, it was the board’s intention to recommend it to shareholders.

That was subject to conditions such as a finding from an independent expert that the offer was fair and reasonable and that the binding offer was on terms agreeable to the board.

Origin chair Scott Perkins said the bid confirmed that Origin was well placed to benefit from the energy transition.

“Our confidence in Origin’s prospects underscored our engagement with the consortium and delivered a material increase on the initial offer,” he said.

Chief executive Frank Calabria said the company had strategic moves in the past year that strengthened its balance sheet and sharpened its strategic focus.



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