I was excited to see Origin Energy Ltd (ASX:ORG) shareholders reject the takeover bid by Canadian asset management company Brookfield and US-based EIG and their attempts to privatise our country’s largest energy provider.
I have to say I hate great Australian companies falling into the hands of overseas companies and being taken off our exchange, especially if the company is acquired for less than its real value.
Also, I have issues with larger shareholders agreeing to these takeovers to gain in the short term rather than looking at the bigger picture. The rejection by shareholders marks the end of a 13-month corporate drama, making it Australia's largest and lengthiest takeover.
Surprisingly, the main shareholder blocking this deal was Australian Super, as it believed that Origin Energy’s value and future are better served in the hands of members and shareholders rather than a private equity consortium looking for quick returns
On behalf of all Australians, I am truly glad to see Australian Super, whose members are everyday Australians, stand up to block this 20-billion-dollar takeover bid.
Major shareholders have influence
Australian Super, who holds a 17% stake in Origin Energy, said the offer, priced at $9.39 per share, was ‘low-ball’ despite 69% of shareholders supporting the bid. For the offer to be accepted, Australian takeover rules require approval from at least 75% of the shareholders, which means the offer fell well short.
Brookfield and EIG's bid aimed to utilise Origin as a vehicle to lead Australia's transition from coal-powered electricity to renewable energy. However, shareholders, including Australian Super, believed the offer undervalued Origin, especially considering the company's rising profitability and increased stake in UK energy firm Octopus.
The bid's failure highlights the influence of major shareholders, who are often big institutions, in determining the fate of significant deals. In my humble opinion, we need more institutions to look at the bigger picture.
Given what transpired this week, we cannot underestimate the role that Australian Super played in opposing the bid for Origin. Superannuation companies are growing larger by the day and increasingly have more power, so I hope others are looking at the lead shown this week by Australian Super.
I also hope that we continue to see more shareholder resistance, and why I strongly advocate for direct share ownership by Australians to protect our valuable resources and companies.
Currently the share price of Origin Energy is down more than 16% since the announcement, which is exciting for those who don’t hold the stock. If it was undervalued at $9.39 a share, then there is some good upside to come. I’d be keeping an eye on this stock as the price will eventually find support and investors who are watching could grab a nice opportunity. It’s not often you get a second chance to buy part of a quality company that has shrugged off a multi-billion-dollar offer.
Dale Gillham is chief analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au
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