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Origin Energy board rejects third offer, likely ending takeover battle

In the ongoing Origin Energy (ASX:ORG) takeover saga, the company’s board has rejected the third offer from the suitors, Brookfield of Canada and US investor EIG. This rejection appears to have put an end to the prolonged takeover battle.

Origin’s board deemed the revised proposal incomplete and complex, urging investors to vote in favor of the existing $18.7 billion offer, which is expected to face defeat at the adjourned scheme of arrangement shareholders meeting on Monday.

Following the rejection of the offer at the adjourned meeting last week, it seems that the takeover is on the verge of collapse unless AustralianSuper, which has consistently opposed the bids, changes its stance at the last minute.

The announcement of the Origin board’s rejection led to a 3% drop in the company’s shares by 11 am on Thursday on the ASX.

With AustralianSuper, holding a 17% stake, voting against the proposal, particularly the second offer valued at $9.43 per Origin share (as opposed to the first offer’s $8.912 per share), the bid’s chances of success seem highly unlikely.

Origin had already indicated that the second offer was effectively dead when it called off the November 3 shareholder meeting and rescheduled it for Monday, December 4, stating that the required 75% shareholder approval was unlikely based on proxy votes received.

The board’s recent rejection of the third proposal followed a thorough review, including input from external advisors. In their statement, they expressed concerns about the proposal’s complexity, conditions, lack of certainty for Origin shareholders, and inadequate compensation. They also highlighted the extended timeline and constraints it would impose on the business.

In the event that the current scheme is not approved at the December 4, 2023, meeting, the board and management intend to continue pursuing Origin’s strategy and ambition in leading the energy transition in Australia. Additionally, they remain open to exploring strategic options that enhance shareholder value.

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