Rejection hurts
AustralianSuper's decision not to back Brookfield's sweetened takeover offer for Origin Energy is bad news for the Canadian asset manager, the M&A community and investment banker bonuses.
The biggest M&A deal in Australia for 2023 — and arguably the most important for many years before that — is looking shaky, at least in its current form. And the implications of it failing could be profound.
This morning, Brookfield raised its offer for Origin Energy to $9.53 per share (at today’s exchange rates) or nearly $20 billion. But the best and final offer has already been rejected by Origin’s largest shareholder, AustralianSuper, the largest investment fund in the country. The price action today (Origin is down more than 6% as I write this) suggests hedge funds betting the deal will succeed are already bailing out.
If the deal does indeed fall over it will be victory for Sydney stockbroker Aitken Mount, which was the first to criticise the transaction on the basis that it undervalued Origin’s strong performance and failed to fully account for its stake in UK energy retailer Octopus. AustralianSuper and Perpetual have since followed. Aitken Mount’s call looks more and more prescient as time goes on. It also reflects the fact the broker is an independent shop unconnected to Sydney’s investment banking industrial complex.
Which brings us to the biggest potential losers from today's developments. If the deal does indeed collapse, it will cap off a difficult year, and a difficult few weeks, for the M&A community.
