Origin acknowledges investors unhappy with $18.7b bid price

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Origin Energy chairman Scott Perkins says his board will do what it can to ensure investors are happy with the takeover bid, after acknowledging shareholder concerns that Brookfield’s current offer undervalues the group.

But he also warned investors at the group’s annual meeting on Wednesday that the energy giant’s share price was likely to fall if they did not accept the $18.7 billion on offer.

Origin Energy’s chairman, Scott Perkins, acknowledged that some of its biggest shareholders are unhappy with the current offer. Credit: Oscar Colman

“We remain engaged with the consortium and shareholders to facilitate a successful scheme,” Perkins told shareholders, after acknowledging that the share price closed on Tuesday 39¢ a share above the $8.91 offer price.

“Shareholders should note that the trading price of Origin shares is impacted by the proposed scheme and that the share price may not necessarily trade at these levels in the absence of the proposed scheme. If the scheme does not proceed, the share price may fall,” he warned.

Origin’s largest shareholder, AustralianSuper, is just one of the shareholders that have publicly agitated for a higher price for the business.

AustralianSuper was buying shares as recently as last month, lifting its stake to 13.7 per cent, saying the current share price “is substantially below our estimate of its long-term value”.

Origin’s board emphasised that the independent expert’s report – which is expected to be released as early as Thursday if the scheme meeting for the deal is approved by the NSW Supreme Court on Wednesday – will have all the information needed to determine whether the offer is fair.

According to Perkins, the Origin board was cognisant of the fact that the independent expert report would evaluate the current performance and prospects for Origin when the board agreed to the deal in March.

This will include the strong recent performance of Origin’s UK energy retailer Octopus, which is now the second-largest operator in the country and recording earnings before interest, tax, depreciation and amortisation (EBITDA) of $240 million last year. Origin has a 20 per cent interest in Octopus.

Origin also announced a slight upgrade to its earnings outlook for this financial year.

“Due to improved operational performance and market conditions, we are now expecting an uplift in the lower end of the energy markets underlying EBITDA guidance range,” Origin chief executive Frank Calabria said.

It lifted the lower end of its underlying EBITDA guidance by $100 million to $1.4 billion.

Origin shareholders strongly supported the re-election of Maxine Brenner to the board on Wednesday. Brenner faced a grilling over her election to the Telstra board on Tuesday due to her board role at Qantas and the airline’s governance failings that have emerged this year.

Perkins said Brenner’s expertise with mergers and acquisitions, which includes a stint on the Takeovers Panel, was invaluable to Origin given the current takeover offer. He also said Brenner planned to leave the board before her new term ended if the current takeover did not go ahead.

More than 93 per cent of investors voted for her re-election, while 98 per cent voted in favour of Origin’s remuneration report.

Following the AGM, Calabria said Origin remained in talks with the NSW government about extending the closing date for the Eraring coal-fired power station, which it is due to shut down in August 2025.

“All I can say is that we’re in active engagement, and both government and ourselves will want to bring them to a conclusion as soon as we can,” he said.

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