Origin Energy receives $18.4 billion takeover offer from Brookfield-led consortium

Origin Energy (ASX: ORG) has today received a takeover offer from a consortium led by asset manager Brookfield that values the electricity retailer and generator at $18.4 billion on an enterprise value basis.

At a price of $9 cash per share, the deal would see Brookfield Asset Management, together with an LNG company formed and managed by EIG called MidOcean Energy, acquire all the issued shares in Origin.

If the deal goes through, Brookfield would acquire Origin’s energy markets business and MidOcean would take control of the integrated gas business.

The latest bid is a significant increase on an earlier proposals from the consortium to acquire Origin for $7.95 cash per share in August, followed up by a further offer to buy the energy company at an indicative price of $8.70 to $8.90 per share in September.

Further, the proposal represents an increase of 16 per cent on its initial proposal, and is at a 54.9 per cent premium to Origin’s last trading share price as at 9 November.

It also represents Brookfield’s continued efforts to get its foot in the door of Australian energy production and distribution, after its bid alongside Mike Cannon-Brookes’ Grok Ventures for AGL (ASX: AGL) fell apart earlier this year.

As for this bid, Origin says that it has already undertaken a period of ‘limited discussions and information sharing’ with the consortium in order to ascertain whether a proposal could be developed that would be in the best interests of the company’s shareholders.

As such, Origin has entered into a confidentiality and exclusivity agreement with the consortium, and the company’s board intends on granting the two parties the opportunity to conduct due diligence - expected to complete within eight weeks.

“Based on current information and market conditions, if the Consortium makes a binding offer at $9.00 cash per share, then it is the current intention of the Origin Board to unanimously recommend that shareholders vote in favour of the proposal, in the absence of a superior proposal,” Origin said.

Origin chairman Scott Perkins said the proposal confirms the company’s strong position in the energy market, and that it is ‘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 their initial offer,” Perkins said.

“While the due diligence process advances, we will remain focussed on the successful execution of our strategy.”

The announcement comes just one day after the company advised it had completed the sale of its interest in the Beetaloo Basin gas project joint venture to Tamboran (B1) Pty Limited.

Tamboran (B1) - an entity 50/50 owned by Tamboran Resources Limited and its substantial shareholder Bryan Sheffield - will now assume control of the Beetaloo Basin joint venture in partnership with Falcon Oil and Gas Australia.

Origin received net proceeds of $60 million for the sale of its 77.5 per cent stake in the JV, and a royalty agreement covering future production over the life of field across Origin’s original interest in the Beetaloo Basin has been executed.

“Completion of the sale of Origin’s interest in the Beetaloo joint venture, and intention to exit other upstream exploration assets over time, will allow greater flexibility to allocate capital towards our strategic priorities to grow cleaner energy and customer solutions and deliver reliable energy through the transition,” Origin CEO Frank Calabria said.

Shares in ORG are up 33.05 per cent to $7.73 per share at 10.41am AEDT.