The impact of the government’s price intervention is one factor behind the delay in firming up a takeover by Brookfield and EIG.
A twice-extended exclusive period granted to bidding partners Brookfield and EIG to access Origin Energy’s books and firm up their $18.4 billion offer has lapsed, leaving investors in the large electricity and gas supplier in the dark on the fate of the mega-takeover deal.
Sources close to Origin and the bidding groups highlighted multiple factors that justify the extended time being taken to complete due diligence. These include the aggressive initial timetable, the fact two bidders are involved, the size and complexity of the deal, as well as the complication of the government intervention in energy markets.But some in the market are zeroing in on the intervention as a likely primary factor putting the deal – or at least the pricing – at risk.
“So I would argue, should this deal fall over, it is very clear evidence of how much value the government is destroying with their actions.” One investor said the share price simply reflected the level of uncertainty around the proposal, and noted there had never been an actual bid on the table, only the intention to make a bid subject to several conditions.Those conditions include approvals from the Foreign Investment Review Board and the competition watchdog, with the latter expected to be particularly interested givenbetween Origin and the AusNet business already owned by Brookfield.
That gives confidence in the bidders’ appetite for the assets, and in the price they are prepared to pay, as well as shows the board has a clear view on value, the investor said.
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