The Origin Energy Ltd (ASX: ORG) share price is lower after giving the latest update regarding the transfer saga.
Origin is one of Australia’s largest energy generators and retailers. It’s currently the subject of takeover attempt by Brookfield and EIG.
New takeover rejected
A week ago, the business said it received a new non-binding and indicative proposal from the consortium.
That offer suggested that if the original takeover offer was rejected, there could be an alternative transaction. It would involve the sale of the energy markets business to Brookfield (subject to a 50% threshold shareholder approval) and a takeover bid by EIG for all of the shares in Origin (requiring acceptances by shareholders holding at least 50.1% of all Origin shares).
Origin noted the revised proposal is “incomplete and highly conditional, including requiring finalisation of funding arrangements, updates to regulatory approvals, rulings from the Australian Taxation Office, and entry into revised legal documentation. In addition, pursuit of the revised proposal would result in an extended timeline.”
After looking at this new takeover and getting advice from its advisers, the board decided the revised offer was not in the best interests of Origin or its shareholders. The board said:
The revised proposal is incomplete, complex, highly conditional, and does not provide sufficient certainty for Origin shareholders. It is also the board’s view that the value of the revised proposal does not adequately compensate shareholders, including taking into account the extended timeline that the revised proposal would require. Further, it would require Origin to accept continuing constraints on the business following an already lengthy period for the current scheme.
What now for the Origin share price?
The original takeover offer is still on the table, though AustralianSuper has been doing what it can to block the deal – it intends to vote no and has been increasing its stake.
Origin said if the original offer is not approved, the board and management will continue to execute on Origin’s strategy and ambition to “lead the energy transition in Australia.”
But, the board said it would “remain open to strategic options that enhance shareholder value.”
The meeting for shareholders to vote on the offer will be on 4 December 2023. That offer is currently worth approximately $9.39 based on the current exchange rates. The board still suggests shareholders vote in favour of this offer.
At the moment, it seems the offer isn’t going to get through, so all of this will have been a big distraction. It’s not the sort of investment I’d want to go for right now.
