Origin Energy (ASX: ORG) accepts revised takeover offer led by Brookfield; shares gain

Highlights:

• On Tuesday, Origin Energy Limited (ASX: ORG) announced that it had inked a SID pertaining to the transaction with the Brookfield-led consortium.
• After discussing with the consortium, the consideration mix has been modified to include AU$5.78 a security and US$2.19 a security.
• ORG has started aiding Brookfield and EIG in the elementary steps for ORG’s separation into two individual businesses- Integrated Gas and Energy Markets.

Origin Energy Limited (ASX: ORG) today, 28 March 2023, accepted a takeover proposal that values the company at an enterprise value (EV) of AU$18.7 billion. As per the proposal from a consortium comprising Canada's Brookfield Asset Management and MidOcean Energy, Brookfield will acquire the energy markets business of Origin while MidOcean Energy, the LNG company managed by EIG, will get partial control of the integrated gas business Australia Pacific LNG (APLNG).

Following this announcement, shares of the energy supplier were trading up by 0.795% at AU$8.235 around 12:40 pm AEDT.

Let's learn more about ORG's takeover offer from the consortium.

After discussing with the consortium on its amended proposal notified on 22 February this year, the consideration mix has been modified to include AU$5.78 a security and US$2.19 a security. This applies equally to every stakeholder. Based on an assumed AUD/USD exchange rate of 0.70, this revised consideration implies a total value of AU$8.912 per share. It corresponds to an enterprise value of AU$18.7 billion for ORG, reflecting a premium of 53.4% of ORG’s last traded price of AU$5.81 a security on 9 November, which was the last day before the first proposal from the consortium was received.

Worth mentioning here is that this consideration will be slashed by any distribution amount paid by ORG before the execution of the scheme. Stakeholders will be paid the total sum in AUD, with the USD part converted into AUD based on the occurring exchange rate at that time when the scheme would be executed.

ORG’s board members have collectively asked the stakeholders to cast their respective votes in favour of the scheme if there is no other superior proposal. They added that it is contingent on an independent expert finalising the scheme is in the best interests of stakeholders.

Terms and conditions of ORG’s takeover offer

The acquisition of 100% issued securities in ORG through a scheme of arrangement by the consortium is subject to the fulfilment of a few terms and conditions, comprising ORG's stakeholders agreeing on the scheme at a meeting of stakeholders. The second is the consent of the court and regulatory bodies like FIRB and ACCC, etc. and the issue of an independent expert’s report, which determines that the scheme is in the best interests of ORG’s stakeholders, etc.

Separation of businesses

ORG has started aiding Brookfield and EIG in the elementary steps for ORG’s separation into two individual businesses- Integrated Gas and Energy Markets. Further, MidOcean has inked an agreement for ConocoPhillips to acquire 2.49% of APLNG from MidOcean once the scheme implementation is complete.

The scheme estimates to be complete by the beginning of the calendar year 2024. However, the actual time for the scheme’s execution will be conditional on the timing for fulfilling the needed regulatory consent.