PERTH (miningweekly.com) – Energy major Origin Energy has received a A$9-a-share non-binding indicative takeover offer from a consortium, which includes Brookfield Asset Management and MidOcean Energy, valuing the company at A$18.4-billion.

Under the proposed offer, Brookfield would ultimately acquire Origin’s Energy Markets business and MidOcean would acquire the Integrated Gas business.

The indicative proposal followed an earlier one by the consortium in August this year, which offered A$7.95 a share, and the September proposal of A$8.70 to A$8.90 a share.

Origin told shareholders on Thursday that given the preliminary and highly conditional nature of these initial indicative proposals, and following the signing of a confidentiality agreement containing customary disclosure restrictions and standstills, the board undertook a period of limited discussions and information sharing with the consortium in order to address certain conditions and ascertain whether the consortium could develop a proposal which was likely to be in the best interests of Origin shareholders.

The new offer price represented a premium of 54.9% to Origin’s last closing price on November 9, and a 60.6% premium to the company’s one-month volume weighted average share price.

Origin has now entered into a confidentiality and exclusivity agreement with the consortium. Under the terms of the agreement, either party can terminate the exclusivity provisions after five weeks and four days with one week’s notice.

Origin said on Thursday that the board intends to grant the consortium the opportunity to conduct due diligence to enable it to put forward a binding proposal. Due diligence is expected to complete within eight weeks. Should Origin receive a competing offer, the company would evaluate it in accordance with the exclusivity provisions.

Based on current information and market conditions, if the consortium makes a binding offer at A$9 cash per share, the Origin board would unanimously recommend that shareholders vote in favour of the proposal, in the absence of a superior proposal. This is subject to the parties entering into a binding scheme implementation agreement on terms acceptable to Origin. It is also subject to an independent expert concluding that the proposed transaction is fair and reasonable and in the best interests of Origin shareholders.

The indicative proposal is subject to a number of conditions, including the completion of a due diligence, a binding scheme implementation agreement being entered into, and approvals by the Australian Competition and Consumer Commission and Foreign Investment Review Board, and a unanimous Origin board recommendation that the shareholders vote in favour of the indicative proposal.

“This proposal confirms that Origin, its operations and management team represent a highly strategic platform, well placed to benefit from the energy transition,” said Origin chairperson Scott Perkins.

“Our confidence in Origin’s prospects underscored our engagement with the consortium and delivered a material increase on their initial offer. While the due diligence process advances, we will remain focussed on the successful execution of our strategy.”

Origin CEO Frank Calabria said that over the past year, Origin has executed a number of important strategic initiatives that have strengthened the balance sheet, sharpened the company’s strategic focus and positioned the company to prosper from the energy transition.

“At the same time, we have a dedicated, engaged and highly-skilled workforce who are committed to delivering good outcomes for our customers and communities. We believe Origin is in a strong position to lead the energy transition, capture opportunities and create value for shareholders.”

Origin this week completed the A$60-million sale of its Beetaloo basin permits to fellow listed Tamobran Resources.

Net proceeds of A$60-million have been received and a royalty agreement covering future production over the life of field across Origin’s original interest in the Beetaloo basin has been executed. Origin has also executed a gas sale agreement conditional on a final investment decision being made and future development occurring. 

“Completion of the sale of Origin’s interest in the Beetaloo joint venture, and intention to exit other upstream exploration assets over time, will allow greater flexibility to allocate capital towards our strategic priorities to grow cleaner energy and customer solutions and deliver reliable energy through the transition,” Calabria said.

Origin expects to record a noncash post-tax loss of A$70-million to A$90-million in relation to the transaction, subject to finalisation of 2023 half-year financial statements. 

Meanwhile, a strategic review of Origin’s remaining exploration permits, excluding interests in Australia Pacific liquefied natural gas project, is progressing, with a view to exiting those permits over time.