AustralianSuper rejects Origin Energy buyout valuation

The news: AustralianSuper has rejected an independent expert review that found the proposed $18.7 billion buyout of Origin Energy by Canada’s Brookfield and US-based EIG as ‘fair and reasonable’.

The numbers: The super fund commissioned Frontier Economics to review the assumptions of independent expert Grant Samuel, who had valued Origin shares at between $8.45 and $9.45, compared to the suitor’s offer price of $8.81 a share. Frontier concluded the assumptions to determine the valuation “are unrealistically low”. Origin shares closed at $9.17 each on Monday, well above the offer price.

The context: AustralianSuper said it intends to vote its 13.67% shares in Origin against the takeover scheme. The decision by Origin’s biggest shareholder has put under a cloud the future of Brookfield-EIG’s takeover bid for Australia’s top energy retailer and gas producer, unless they sweeten their offer. While Origin’s board has supported the existing deal, it still requires a 75% approval at a shareholder vote set for next month.