A consortium comprised of Brookfield Renewable Partners – together with its institutional partners and global institutional investors GIC and Temasek – and MidOcean Energy, an LNG company formed by institutional investor EIG, has entered into a scheme implementation deed with Origin Energy Limited (ASX:ORG) to acquire 100 per cent of the company’s shares.
The scheme values Origin at an enterprise value of $18.7 billion, based on more than 1.7 billion diluted shares outstanding and a net debt of $3.3 billion as disclosed in Origin’s 2023 half year report.
The purchase price of $8.91 per share represents a 53.4 per cent premium to the company’s unaffected share price.
Origin’s Board has stated it is unanimously recommending that Origin shareholders vote in favour of the scheme in the absence of a superior proposal, and subject to an independent expert concluding the scheme is in the best interests of shareholders.
Upon closing of the transaction, Brookfield, its institutional partners and investors will own Origin’s Energy Markets business, Australia’s largest integrated power generator and energy retailer.
MidOcean will separately own Origin’s Integrated Gas segment including its upstream gas interests and the 27.5 per cent stake in Australia Pacific LNG (APLNG).
MidOcean has entered into an agreement to on-sell a 2.49 per cent interest in APLNG to ConocoPhillips, which as a 47.5 per cent owner in APLNG, is the current downstream operator and intends to take over upstream operatorship of APLNG.
Brookfield Asset Management and Head of Transition Investing Chair Mark Carney said: “As the energy transition gathers pace, what’s needed is increasingly clear – faster deployment of large-scale renewables; the accelerated, responsible retirement of coal generation; and an interim, supportive role for gas as the dependable back-up fuel.
“Brookfield is determined that the new Origin Energy Markets will lead the way in all respects at this critical moment for the Australian economy.”
In addition to its institutional and investor partners, Brookfield is also working with Reliance Industries as a strategic partner to assess areas of collaboration in renewable energy in the context of the transaction.
Brookfield is pursuing this acquisition through the Brookfield Global Transition Fund I, which is the largest private fund in the world focused on the transition to net zero.
Brookfield Renewable, which has significant available liquidity, expects to invest up to US$750 million, which will be funded through a mix of corporate debt, up-financing of existing hydro assets and proceeds from asset recycling initiatives.
EIG is pursuing the acquisition of Origin’s Integrated Gas business through MidOcean Energy, an LNG company formed and managed by EIG to create a diversified, ‘pure play’ integrated global LNG portfolio of high-quality operating LNG projects with strong, long life cash flows.
This acquisition would represent a continuation of MidOcean’s business strategy and would build upon MidOcean’s Australian presence, having recently entered into a definitive agreement with Tokyo Gas to purchase interests in four operating Australian LNG projects.
EIG is among the largest specialist investors in energy and infrastructure globally and has had an established presence in Australia since 2000.
EIG Chief Executive Blair Thomas said: “LNG will be critical in delivering energy transition targets, and this transaction is a compelling opportunity to accelerate EIG’s strategy of gaining exposure to high-quality LNG assets around the globe.
“We have long been attracted to the Australian market, with an established presence in Australia since 2000, and look forward to playing a pivotal role in meeting Australia’s transition targets by enabling broader decarbonisation efforts at APLNG.”
Brookfield and EIG view Origin as critical to Australia’s energy transition and energy security.
Both parties intend to use the acquisition to create separate platforms that will assist Australia’s transition to a net zero future.
Brookfield intends to accelerate the development of renewable generation capacity for Origin Energy Markets, which is expected to make a material difference to achieving Australia’s net zero targets at this crucial time in its energy transition.
The business plan for Origin Energy Markets contemplates at least $20 billion of additional investment during the next decade to construct up to 14 GW of new renewable generation and storage facilities in Australia.
This is expected to enable the retirement of one of Australia’s largest coal-fired power generation plants, Eraring, and will be undertaken with the highest regard for network reliability and security.
The proposed investment in new-build renewables for Origin Energy Markets would represent approximately one-fifth of the new utility-scale renewable capacity identified by the Australian Energy Market Operator that is required to be developed across the National Electricity Market (“NEM”) through to 2030.
In addition to bringing access to necessary capital, Brookfield has significant expertise in renewable power development, global relationships with suppliers and a track record of success.
Brookfield is one of the world’s largest owners, operators and developers of renewable power, with approximately 25 GW of generating capacity and a 110 GW development pipeline globally.
It has more than 40 years’ experience in scaling large renewable developments in North America, South America, Europe and Asia Pacific.
Origin Energy Markets’ existing 3.1 GW fleet of gas-fired generation and pumped hydro storage provides reliable capacity at peak periods and at times when renewable generation is intermittent.
This firming capacity is critical to the build out of scale renewable capacity and will facilitate Australia’s transition to net zero.
MidOcean recognises that LNG and natural gas are integral to the economies of Asia and Australia and is committed to continue delivering meaningful gas volumes into Australia’s east coast domestic market in support of local business and households.
APLNG is also critical to the achievement of decarbonization targets within the Asia-Pacific region.
As coal-to-gas switching accelerates in Asia, APLNG’s status as a major supplier of LNG to key customers across Asia will play a critical role in helping them bridge toward a net zero future.
