After months of delays, Brookfield Asset Management (TSX:BAM.A) Inc and its consortium of buyers have reached an A$18.7 billion (US$12.4 billion/C$17 billion) deal to buy Australian utility giant Origin Energy Ltd (ASX:ORG).
The consortium, which also includes Washington DC private equity firm EIG Global Energy Partners, had upped its offer to acquire Origin in recent weeks. The final purchase values Origin at A$8.912 per share, according to regulatory filings.
Shares of Origin increased 3.2% to A$8.17 on Monday in Sydney.
The acquisition gives Toronto-based Brookfield more exposure to renewable energy in Australia, where authorities are increasingly moving to close coal plants, according to reports.
“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 backup fuel,” Brookfield head of transition investing Mark Carney said in a statement.
Origin’s board has unanimously recommended the deal, which would see the company be broken up, and its goal is to complete the takeover in early 2024.
Brookfield will take on Origin’s large utility and generation business, which operates Australia’s largest coal plant and serves 4.5 million homes and businesses, according to reports. The firm plans to invest in its decarbonization.
EIG will take Origin’s liquified natural gas unit.
“The transaction represents a significant premium to the share price prior to the original indicative proposal, and reflects the strategic nature of Origin’s platform, its growth prospects and anticipated earnings recovery,” Origin chair Scott Perkins said in a separate statement.
A plan to offer a split payment will be extended to all shareholders and include a component in US dollars to account for the company’s 27.5% stake in the Australia Pacific LNG joint venture with ConocoPhillips (NYSE:NYSE:COP) and Sinopec, according to the announcement.
EIG’s MidOcean Energy will sell a further 2.49% stake in the LNG unit to ConocoPhillips (NYSE:COP) after the takeover is completed, Origin said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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