Brookfield’s takeover bid for Origin delayed, as expert warns against move

Origin Energy’s proposed takeover by a Brookfield Corporation-led consortium may not be in Australia’s best interests, according to an energy expert, as the foreign investment fund continues its attempt to take a huge slice of the country’s energy market.

Liam Wagner, an associate professor specialising in energy economics and policy at Curtin University, said Brookfield is “probably not” the type of company Australia wants investing in its energy market.

“It is very difficult when you have a significant amount of foreign ownership in large energy companies in Australia, particularly in the electricity sector,” he said.

“With privatised interest in electricity generation and retail and the compounding number of issues with foreign private ownership it is pretty undesirable.”

AustralianSuper, which owns a 16.5 per cent stake in Origin Energy, signalled it would vote against a proposed purchase by Brookfield at $9.43 a share, delaying Thursday’s shareholders vote until December 4.

AustralianSuper said it rejected the offer because “the current offer from Brookfield consortium remains substantially below our estimate of Origin’s long-term value,” based on its near-33 per cent market share.

Origin Energy said it had received a revised $10.6 billion offer from Brookfield with a number of caveats:

  • Shareholders can reinvest in the Brookfield-owned energy markets business after the completion of the sale with the same price per share as previously proposed, and;
  • If it fails again, an alternative sale at $12.3 billion will be put forward to shareholders.

Brookfield is leading a consortium alongside EIG Partners, an American investment firm, which aims to take control of Origin’s integrated gas business if the sale is completed.

Pivotal moment

At such a pivotal moment in Australia’s energy transition from fossil fuels to renewable energy, Wagner said the deal is “better for them than it is for Australia”.

“I’m not quite sure it would be better for the Origin shareholders either,” he said.

“They’re one of the biggest retailers and they’re mostly self-hedged, so they generate their own capacity.”

Brookfield plans to use a successful purchase as a springboard into Australia’s growing renewable market.

Wind turbines on a wind farm, Albany, Western Australia, Australia - stock photo

There is growing pressure for Australia to invest more in renewables, and the Brookfield consortium is promising to do exactly that. Photo: Getty

Brookfield has said it will invest between $20 billion and $30 billion into renewable energy, almost tripling the energy output earmarked by Origin.

The future

EIC and Brookfield are major players in the world energy market and have a strong presence in Middle Eastern fossil fuel production.

Brookfield has received hundreds of millions in investment from the Qatar Investment Authority, the sovereign wealth fund of one of the world’s biggest exporters of gas and oil.

EIG also owns a 49 per cent equity stake in Saudi Aramco’s oil pipeline business, after paying $US12.4 billion in 2021 for part of the Saudi Arabian national oil corporation.

Wagner said he hopes to see the Australian Competition and Consumer Commission (ACCC), the Foreign Investment Review Board and the responsible federal minister investigate if this would be best for Australia.

“Really, these guys are looking for a bargain,” he said.

“I don’t know if it’s in the best interests of everyone in Australia that this is on the table.”

The ACCC authorised the proposed acquisition of Origin in October, despite concerns over competition.

“Likely detriments, particularly anti-competitive effects from vertical integration, had to be weighed against likely benefits to Australia’s renewable energy transition,” ACCC chair Gina Cass-Gottlieb said.

“The ACCC considers that the acquisition will likely result in an accelerated rollout of renewable energy generation, leading to a more rapid reduction in Australia’s greenhouse gas emissions.”

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