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| Thursday November 23, 2023 |
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It’s D-day for Origin Energy shareholders. |
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After weeks of relentless campaigning, we finally get to learn the fate of EIG/Brookfield’s $20 billion scheme bid at 2pm. |
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Clearly, it is a tight-run contest. Most Origin investors you speak to are only too happy to take the $9.43 a share and let someone else do the transition heavy lifting, although that’s not the way AustralianSuper see it and they have the biggest vote. |
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Origin and its bidders know the scheme is on shaky ground. They’ve been sitting on the proxy votes for more than one day now, and had plenty of time for their reconciliations. |
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Brookfield and EIG were making a last-ditch effort to shore up their proposal on Wednesday night with some variations – which is either desperate or smart depending on who you ask. |
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What could it be? And will it be enough for Origin? It would want to be something good if it is to have any impact at all on scheme meeting day. They are already “best and final” and so cannot raise their offer. |
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Given the tight contest, it is prudent to consider how Origin Energy’s shares trade post the vote. |
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If it gets up, the shares will rocket towards the $9.43 proposal price. If it doesn’t (the much more likely outcome), market participants told Street Talk they reckon shares are unlikely to trade much lower than $8. The stock finished at $8.42 on Wednesday. |
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For fast money arb funds, their biggest fear is normally that the deal breaks and shares fall back to pre-bid levels. For Origin, that would have been around the $5.80 mark. |
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That’s not going to happen at Origin. |
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For one, Origin has upgraded profit nearly half a dozen times since Brookfield and EIG put it in play this time last year. |
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Second, the bid process which has included lengthy discovery and an independent expert report/valuation has highlighted to investors the latent value in Origin. Few had heard of Octopus, which is now being played up as key profit centre and venture capital-style home run. |
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Finally, if the deal falls through, attention will quickly turn to whether Brookfield–EIG will return with a takeover bid (rather than a scheme) – potentially even something pre-emptive now proxies have been collected. Watch this space (although you have to question whether they really have the funding). |
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All this could support the Origin price once the result is announced. |
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The final makeup of the vote is worth watching. If there’s a strong vote in favour, it could be a sign shareholders want to see something structural like asset sales or a demerger. If it’s a weak vote, they don’t and everyone plays on. |
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| Emma Rapaport Co-editor, Street Talk |
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The $US860 billion consulting sector is battling global economic uncertainty and the fallout from a spree of ethics scandals, Bloomberg reports.Britain needs a “digital alternative” to relying on Visa and Mastercard for card payments regardless of steps being taken by regulators, Reuters reports, citing a review commissioned by the government.The UK government will give more powers to its investment office to create a concierge service for large international investors, Reuters reports. |
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AustralianSuper controls just shy of 8 per cent of Endeavour’s shares. |
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