Independent expert terms $18.7b Origin Energy deal ‘fair’

The news: An independent expert review has found Origin Energy shares could be worth up to $9.48 each but has termed the proposed $18.7 billion buyout by Canada’s Brookfield and US-based EIG as ‘fair and reasonable’.

The numbers: Independent expert Grant Samuel valued Origin shares at between $8.45 and $9.48, compared to the suitor’s offer price of $8.81 a share. However, the company’s shares are trading well above the offer price, at $9.22, after investors including biggest shareholder AustralianSuper signalled the current offer price undervalues the company.

The context: The review described the Brookfield-EIG bid as ‘fair and reasonable’, keeping alive the takeover deal for Australia’s top energy retailer and gas producer. Origin’s board has already agreed to the offer price, and the ACCC earlier this month approved the deal saying it would likely result in an accelerated roll-out of renewable energy generation. However, the implied valuation in the report is likely to put further pressure on the bidders to sweeten the offer price in order to sway Origin shareholders.