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It was revealed on Thursday that Origin had subsequently received an indicative takeover offer from the Brookfield-EIG consortium at $7.95 a share on August 8. The bidders then made another pitch at $8.70 to $8.90 a share, before Origin agreed to participate in talks that led to the $9-a-share bid.
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“Our confidence in Origin’s prospects underscored our engagement with the consortium and delivered a material increase on their initial offer,” Origin chairman Scott Perkins said.
Origin’s share price soared 34 per cent to end the day trading at $7.80, its highest in more than two years, with a number of investors signalling support for the offer.
Allan Gray portfolio manager Suhas Nayak said Origin’s board had “done right by shareholders” in deciding to grant due diligence at the higher offer price.
“The board has done a good job,” he said. “There is a balance here between the opportunity for existing shareholders and a deal being done.”
Another investor, Merlon Capital, also said the offer represented “compelling value”. “We see the bid at the upper end of our valuation range,” it said.
The takeover, if it proceeds, will require regulatory approval from Australia’s Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC), which said on Thursday it expected to conduct a public review into the proposed deal. Possible competition concerns may arise from Brookfield’s ownership of Victorian power transmission network operator AusNet.
“A lot of things need to happen before [the offer] is presented to shareholders,” Nayak said.
However, CLSA analyst Daniel Butcher said the offer, at a 55 per cent premium, was “very likely to proceed”. “We view the deal as a knockout offer,” he said. “The conditions are fairly standard – due diligence, ACCC, FIRB – so we believe the risks to the deal becoming binding are quite low.”
MidOcean Energy chief executive De la Rey Venter on Thursday said his company had been actively seeking to acquire interests in high-quality projects in the Asia-Pacific region that could benefit from its extensive LNG experience. EIG had attempted to enter the APLNG joint venture in October last year, agreeing to buy some of Origin’s interest. But the deal was blocked by one of Origin’s venture partners, US-based ConocoPhillips.
“Origin’s integrated gas business – which would build on MidOcean’s existing investment in Australia – will help enable broader decarbonisation efforts in the region by supplying critical natural gas and LNG to the domestic and global markets for decades to come,” Venter said.
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