AustralianSuper has indicated it will vote against a bid to acquire Origin Energy, stating the offer price is “unrealistically low”.
The ASX-listed firm is currently subject to a takeover bid from Canadian alternative investment manager Brookfield and private equity firm EIG that would see Brookfield acquire Origin’s electricity and gas retail arm and its power generation assets.
In a statement on 31 October, AustralianSuper said it intends to vote against the takeover as it believes the business valuation is “unrealistically low”.
Brookfield later increased its offer on 2 November but AustralianSuper said it will still reject the offer.
It has already been increasing its weighting to the firm and currently holds a 13.7 per cent stake that makes it the business’ largest shareholder.
Shares in the company have risen by 57 per cent in the 12 months to 2 November compared to losses by the ASX 200 of 2 per cent.
“AustralianSuper believes Origin has a highly strategic portfolio of assets to participate in, and benefit from, the energy transition,” it said.
“The fund has engaged energy industry experts, Frontier Economics to review the assumptions used in the Independent Expert’s Report. Frontier Economics are also of the opinion that the assumptions used in the IER to derive a business valuation are unrealistically low.
“The current offer from the Brookfield and EIG-backed consortium remains substantially below our estimate of Origin’s long-term value. AustralianSuper believes the ongoing energy transition, as we move towards net zero by 2050, has further enhanced the value of strategic energy transition platforms, such as Origin.”
Unlike Brookfield and EIG, the super fund believes the valuation multiples are significantly below the multiples from a number of recent relevant transactions and the trading multiples of relevant comparable companies.
It described how Origin has a “unique portfolio of market-leading energy assets and an advantaged position to capture value from the energy transition”.
This includes its focus on renewable energy such as renewable energy supplier Octopus Energy, which Origin has a 20 per cent stake in, its portfolio of storage and renewable development projects and the operation of its Australian Pacific LNG gas fields.
“Origin should be well-placed to continue to access gas for its energy markets business, while benefiting from the likely continued strong global demand for LNG,” it said.