Brookfield's game of chicken
The Canadian asset manager is one step closer to achieving its $18.7 billion takeover of Origin Energy. Now comes the hard part.
With a green light from the ACCC to acquire Origin Energy, Canadian fund manager Brookfield has cleared one major hurdle for the $18.7b deal that will give it a starring role in Australia’s clean energy transition.
But an even bigger obstacle may remain: convincing Origin Energy shareholders that the offer is good value for money, even though it was put forward nearly a year ago when the company’s prospects were not so upbeat.
If Brookfield is convinced that its current offer is a fair reflection of Origin’s future value, it will have to stare down influential institutional investors including AustralianSuper and Perpetual in an old-fashioned game of chicken and stick to its guns on price.
Should the Canadian asset manager buckle, the question is, how much would it need to bump up the offer to assuage shareholders? And how much would that increase eat into its expected returns for an asset facing escalating costs on multiple fronts including equipment, wages and the transmission rollout.
