Origin Energy agrees A$19bn takeover bid from Brookfield and EIG consortium

Australian energy company Origin Energy has agreed to be bought by a Brookfield and EIG consortium for A$18.7bn (€11.5bn) following the consortium’s approaches last year.

Origin Energy said that, in the absence of a superior proposal, it is unanimously recommending that its shareholders vote in favour of the latest offer from the consortium comprising Brookfield Renewable Partners, Singapore’s GIC and Temasek and EIG’s MidOcean Energy.

In November last year, Brookfield and Washington DC-based EIG made an A$18.4bn takeover bid for Origin Energy. At the time, the bidders proposed to acquire all of Origin Energy’s shares at A$9 a piece by way of a scheme of arrangement.

The indicative proposal followed an earlier proposal from the Brookfield-EIG consortium to acquire Origin Energy for A$7.95 a share in August the same year, which was subsequently increased to between A$8.70-A$8.90 a share.

Following the completion of the deal, Brookfield and its institutional partners and investors GIC and Temasek will own Origin Energy’s energy markets business, which is Australia’s largest integrated power generator and energy retailer. Brookfield, through the US$15bn (€14bn) Brookfield Global Transition Fund I global energy transition fund, expects to invest up to US$750m for its interest in the deal.

MidOcean will separately own Origin Energy’s integrated gas segment including its upstream gas interests and the 27.5% stake in Australia Pacific LNG (APLNG). MidOcean has entered into an agreement to on-sell a 2.49% interest in APLNG to ConocoPhillips which already owns a 47.5% stake in APLNG.

ConocoPhillips said it expects to pay US$500m for its 2.49% shareholding interest in APLNG.

Mark Carney, chair and head of transition investing at Brookfield Asset Management, said: “As the energy transition gathers pace, what’s needed is increasingly clear: faster deployment of large-scale renewables, the accelerated, responsible retirement of coal generation, and an interim, supportive role for gas as the dependable back-up fuel. Brookfield is determined that the new Origin Energy Markets will lead the way in all respects at this critical moment for the Australian economy.”

EIG CEO Blair Thomas said: “LNG will be critical in delivering energy transition targets, and this transaction is a compelling opportunity to accelerate EIG’s strategy of gaining exposure to high-quality LNG assets around the globe.

“We have long been attracted to the Australian market, with an established presence in Australia since 2000, and look forward to playing a pivotal role in meeting Australia’s transition targets by enabling broader decarbonisation efforts at APLNG.”

Brookfield Asia-Pacific CEO Stewart Upson said: “The acquisition of Origin Energy presents Brookfield with a unique opportunity to invest at least $20bn and make a material difference to achieving Australia’s net zero targets.

“We will build on the success of our global renewable power and transition business where we have a mandate to ‘go where the emissions are’ in putting billions of dollars behind an executable plan to reduce emissions at Origin.”

Florence Chong contributed to this article.

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