ASX-listed Origin Energy chairman Scott Perkins told shareholders that the board considered the improved outlook for the business when agreeing to an $18.7 billion takeover offer from North American suitors Brookfield and EIG, and cautions that failure to approve the deal will trigger weakness in the share price, according to a report in the Australian Financial Review.
The comments, made during an annual shareholders’ meeting, follow the surge in Origin's share price above the offer from Brookfield and EIG, after the merger was approved by the competition regulator last week.
Some institutional investors have called for a sweetening of the offer, taking into account Origin’s improved performance and the market’s outlook from the time the deal was agreed.
Marginal improvement
During the meeting, Origin chief executive officer Frank Calabria noted a "marginally improved" outlook since the company’s results were published in August.
“Due to improved operational performance and market conditions, we are now expecting an uplift in the lower end of the energy markets underlying EBITDA guidance range,” Calabria said.
“In integrated gas, our forecast was for Australia Pacific LNG production to rebound and cash flow to remain strong.
“We now expect a further improvement in Australia Pacific LNG production towards the top end of the guidance range provided.”
Deal needs shareholder backing
As of Tuesday's close, shares of Origin, Australia's biggest energy retailer, were at $9.30, $0.39 above the $8.91 per share agreed in March.
However, it is worth noting that the offer was almost a 50% premium over Origin’s share price when the deal was announced in November.
“Ultimately, the scheme requires shareholder approval to proceed, and the board will continue to work to facilitate that,” Perkins said.
The board’s final recommendation hinges on an independent expert's report, which is expected to reach shareholders next week, pending a favourable court decision scheduled for later this afternoon.
Energy transition lacks urgency
The Australian Competition and Consumer Commission (ACCC) recently endorsed the takeover, emphasising the public benefit of an accelerated transition to low-carbon energy.
Brookfield has committed to investing between $20 billion and $30 billion in clean energy through Origin over the next decade.
Perkins acknowledged the substantial challenges in meeting the Australian government's 82% renewables target by 2030, emphasising the urgent need for progress.
“What has become increasingly clear this year, with several major renewable and transmission projects delayed, is Australia is not moving fast enough.”