Macquarie has advised clients that North American bidders for Origin Energy should consider raising their offer price to at least $10 per share, in light of the company's recent performance improvements.
This advice is significantly higher than Brookfield and EIG Partners' current bid of about $8.85 per share.
Ian Myles, an investment analyst at Macquarie, suggested that a fair price for Origin was now between $9.49 and $10.08 per share, around 14% more than the existing offer.
The recommendation arrives on the heels of fund manager Perpetual's public call for a better deal from Origin's suitors.
Head of Australian equities at Perpetual Vince Pezzullo cited factors such as the extension of the Eraring coal power station in New South Wales and a surge in profits at partially owned Octopus Energy in Britain.
Perpetual's stance reflects an increased value of Origin's business, which posted an 83.5% rise in annual profits, sparking debate over the offer's adequacy.
Origin's chief executive Frank Calabria noted that the valuation was a matter for shareholders, as an independent assessment was ongoing. Share prices in Origin rose 6¢ to $8.59 on Wednesday.
Brookfield declined to comment but has previously mentioned that without a deal, Origin would need to find a capital partner for its renewable projects, thereby diluting existing shareholders' stakes.
While the offer's pricing dates back to a March agreement, the Australian Competition and Consumer Commission (ACCC) is scheduled to release its decision by September 28. The board of Origin has also indicated that it will consider investor feedback on the offer price.
According to Macquarie, Origin’s situation has “materially improved” since the initial deal in February. The investment bank said the cost of breaking the transaction agreement, estimated at around $151 million, was trivial compared to the company's estimated enterprise value of $20 billion.