Origin Energy shares jump after ACCC approves takeover
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More news: Shares in Origin Energy rose nearly 5% to $9.16 in early trading on the ASX after the competition watchdog greenlighted the buyout of Australia's top energy retailer and gas producer by a consortium of Canada’s Brookfield and US-based EIG. The proposed bid is worth around $8.91 a share, valuing the company at $18.7 billion.
ACCC approves $18.7b takeover of Origin Energy
The news: Australia’s competition watchdog has approved the proposed buyout of the country’s top energy retailer and gas producer Origin Energy by a consortium led by Canada’s Brookfield and US-based EIG.
The numbers: The takeover offer for Origin is worth around $8.91 a share, valuing the company at $18.7 billion. Origin Energy shares last traded at $8.73 on Monday.
The context: The Brookfield consortium will acquire Origin's energy markets business, while EIG's MidOcean will own Origin's upstream gas interests. Brookfield and EIG offered a spate of concessions in order to seek the green light from the ACCC, including ring fencing the Brookfield-controlled electricity transmission and distribution firm AusNet, and proposed spending of between $20 billion and $30 billion to develop renewable energy generation projects.
The ACCC said it was initially not satisfied the proposed acquisition would not substantially lessen competition. However, after a detailed review, it concluded the deal is likely to result in public benefits that would outweigh the likely public detriments.
What they said: “We found that the public benefits and public detriments in this matter were finely balanced. Likely detriments, particularly anticompetitive effects from vertical integration, had to be weighed against likely benefits to Australia’s renewable energy transition. We considered undertakings offered by Brookfield, AusNet and MidOcean in this weighing process,” ACCC Chair Gina Cass-Gottlieb said.
“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,” Ms Cass-Gottlieb added.
The sources: ACCC, ASX announcement
