Origin investors reject Brookfield’s $10.6 billion bid on proxy votes

By Scott Murdoch and Lewis Jackson

SYDNEY (Reuters) -A Brookfield-led consortium’s $10.6 billion bid for Origin Energy collapsed on Monday after shareholders voted down the plan, leaving Australia’s largest power retailer open to other investors to fund its energy transition plans.

The votes were 31.08% against the bid with 68.92% in favour, according to presentation materials shown to investors, lower than the 75% threshold required for a takeover to proceed.

Chairman Scott Perkins said after the vote Origin would continue as an independent listed company and the board, which recommended the bid, would remain in place.

The deal was expected to fail after Origin’s largest shareholder A$300 billion ($198 billion) pension fund AustralianSuper said it would reject the A$9.39 per share offer.

AustralianSuper owns about 17% of Origin, which was enough to block the bid. The fund welcomed the shareholders’ decision.

“We have never wavered in our belief that the value and future value of Origin is better in the hands of members and other shareholders rather than a private equity consortium seeking to make a quick return based on the proposed scheme terms,” an AustralianSuper spokesperson said in a statement.

Brookfield’s proposal, made with EIG Partners, promised to build 14 gigawatts of renewable energy as part of a ten-year, A$20 billion to A$30 billion investment plan.

Origin already has plans to develop 4 gigawatts by 2030, and Perkins reaffirmed that strategy, adding that the company was open to working with other investors.

“The way we’ve seen the energy transition is there’s been plenty of scope for third party capital to invest alongside Origin,” Perkins told reporters after the vote.

“So all those pools of low cost of capital are interesting to Origin, they always have been. AusSuper would be absolutely one of the obvious sources of that capital,” he said, adding that Origin had not held any talks with AustralianSuper so far.

In its statement, AustralianSuper said it would be a willing capital partner for Origin as it ‘”prepares to transition over the coming decades”.

Origin’s board on Thursday rejected an alternative proposal lodged last week from the consortium to be considered if the current offer failed.

Brookfield flagged on Friday if the deal was voted down the consortium would need to consider whether a new government plan to reshape energy markets negatively impacted its view of Origin’s value.

Origin shares were down 3.9% ahead the investor vote. The shares are on a trading halt.