An August 8 letter to Scott Perkins, Origin Energy’s chairman, set the scene for a deal that has buoyed the conversation around Australia’s energy transition.
Monday, August 8, 2022, will be forever etched in the minds of Origin Energy chairman Scott Perkins and the company’s chief executive, Frank Calabria.
Origin’s CEO Frank Calabria and chairman Scott Perkins were rewarded for running harder toward the energy transition.Brookfield’s play for Origin, still in live negotiations some 4½ months after the letter dropped on Perkins’ desk, opens the Australian energy company up to a treasure chest of cash to invest, build and operate renewable power projects. These are part of a slew of projects that will form the new backbone of Australia’s national electricity market.
Origin’s shares jumped as much as 6.6 per cent to $7.55 – partly closing the gap between the market and bid prices – as hedge funds circled. While somewhat taken aback when Brookfield came calling, Perkins and Calabria were not entirely surprised given the Canadian firm’s interest in AGL, people close to the negotiations told theBrookfield had also outlined its plans to invest in transitional energy sources and its local and offshore teams had kicked the tyres on Australia’s energy space.
Eventually, on November 10, a non-binding and indicative agreement was inked for $9 a share, valuing the transaction at $18.4 billion including debt. The offer came at a 55 per cent premium to Origin’s share price, and 13 per cent higher than the initial offer received soon after Perkins opened his special letter in August.Investment bankers, who have spent years fostering relationships with these regular transactors, saw a chance to win one of the biggest pay days in Australian MA history.
Neither did Origin announce any sort of strategic review, which would have seen investment bankers forming queues, vying for its business outside the energy company’s Barangaroo headquarters. In October last year, EIG offered to buy a 10 per cent stake in Origin-owned APLNG for $1.6 billion. But oil and gas giant – and existing APLNG partner – ConocoPhillipsEIG, no stranger to the LNG space, did not lose sight of the prize. It still wanted a piece of APLNG.
Australia, meanwhile, is screening as a preferred destination for cashed-up private investment funds, another key ingredient in the energy infrastructure pipeline, Church said.
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