Australia’s top pension fund has aptly chosen Halloween to try to scare Brookfield Asset Management (BAM.TO) and co-bidder MidOcean Energy to dig deeper in their pursuit of Origin Energy (ORG.AX). AustralianSuper said on Tuesday it intends to vote its near-14% stake against the current A$18.7 billion ($12 billion) offer next month. That’s likely to bury the buyout unless the buyers can scare up a much better proposal.
The takeover requires the backing of 75% of shares voted. Perpetual (PPT.AX), which owns around 3%, had previously called the offer too low. That leaves the buyers a thin margin for error even if all investors turn out to vote. If AustralianSuper, which bought more shares last month, were to increase its stake to 19.9% – the most an investor can own before the next layer of takeover rules kicks in – it could dictate terms to Brookfield and MidOcean.
More money would, of course, solve the problem. AustralianSuper has pointed to recent power deals as a guide. Assume the two sides split the difference between the roughly 6 times EBITDA Brookfield is offering for Origin and the 12.9 times APA (APA.AX) paid for some gas and renewable energy assets last month. That would add more than $7 billion to Origin’s valuation. On that score, the pension fund’s intervention may frighten the deal to death. (By Antony Currie)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
