Australia's Origin Energy Bags $10B Takeover Offer

  • Australia’s Origin Energy Ltd OGFGY OGFGF bagged a takeover proposal worth around $10 billion from a consortium led by Brookfield Asset Management Inc. BAM.
  • Origin said the consortium comprising Brookfield and the LNG arm of private-equity firm EIG had indicated it would make a cash offer at 9 Australian dollars a share, equivalent to $5.79.
  • Origin said its board plans to recommend that shareholders vote in favor of a deal if the consortium makes a formal bid after completing due diligence and in the absence of a superior proposal.
  • The consortium’s latest offer follows two earlier proposals.
  • Origin is a significant shareholder in the Australia Pacific LNG plant in eastern Australia’s Queensland state, which supplies liquefied natural gas to Asia, the Wall Street Journal reports.
  • The ConocoPhillips COP operated facility has benefited from elevated LNG prices after Russia’s invasion of Ukraine, as European countries scour the world for alternative sources to Russian supply.
  • The report added that Origin also owns power plants and is one of Australia’s most considerable electricity and gas retailers to households and businesses. 
  • The proposal would ultimately result in Brookfield acquiring Origin’s Energy Markets business and MidOcean buying the Integrated Gas business.
  • Last year, Origin agreed to sell a 10% stake in the Australia Pacific LNG project to EIG for 2.12 billion Australian dollars. Still, the deal failed as ConocoPhillips exercised its pre-emption rights to acquire the interest instead.
  • Analysts expect LNG prices to remain high for some time as Europe spends billions of dollars to wean itself off Russian gas, despite China’s economic weakness and potential for a global recession.
  • Price Action: OGFGY shares closed 2.14%higher at $3.70 on Wednesday.
  • Photo Via Company
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