Origin Energy shareholders will be pressing for an upgraded takeover bid from Brookfield and EIG after the Australian Competition and Consumer Commission (ACCC) greenlit the acquisition deal with minimal conditions, citing an acceleration of the energy transition in Australia as one of the core reasons for the Commission’s approval.
The decision – coupled with the Hamas-Israel conflict’s effect on oil and energy stocks – sent Origin shares surging by 5.5%, landing above the original offer price at $9.21 a share.
“The ACCC considers that the acquisition will likely result in an accelerated roll-out of renewable energy generation, leading to a more rapid reduction in Australia’s greenhouse gas emissions,” ACCC chairwoman Gina Cass-Gottlieb said, highlighting the public benefits of the deal.
Federal Government offers support
Energy Mininster Chris Bowen weighed in on the decision, commenting that he welcomed the approval decision as a “good step forward” when addressing The Australian Financial Review Energy and Climate Summit in Sydney.
“I believe their plans to invest in renewable energy in Australia are very substantial and real and meaningful ... More investment in Australia renewables is very welcome,” he said.
The decision came with the condition of tightened commitments to maintain competition – including a new initiative by Brookfield’s network company Ausnet – but with none of the asset sale requirements expected by some investors.
Market analysts suggest that the offer undervalues Origin, given its enhanced performance and brightening market outlook over the year or so since the offer was made.
Approval from 75% of Origin Energy shareholders is required for the deal to move forward, with some analysts expecting a per-share offer of closer to $10-$11, compared to the total of $9.19 a share currently on offer.
The ACCC clearance overcomes a major regulatory hurdle for Brookfield and EIG, but whether it satisfies shareholders' valuation of Origin Energy remains to be seen.