Origin’s top shareholder rejects Brookfield’s revised $10.6 billion bid. After it became apparent that investors would vote down an earlier offer of $10.6 billion, Origin Energy’s (ORG.AX) largest shareholder announced on Thursday that it would reject a complicated new offer by a Brookfield-led consortium to buy Australia’s largest energy retailer. The new offer was made after it became evident that investors would vote against the prior offer.

The meeting of Origin shareholders scheduled to take place in Sydney on Thursday to vote on the initial deal has been postponed until December 4 to evaluate the revised offer, which would let institutional investors retain ownership of portions of Origin.

The Board of Origin has not yet issued an official decision about the alternative proposition; nonetheless, they have stated that “the transaction appears inferior to the existing scheme.” They cited the transaction’s complexity and the possibly negative tax results for the firm and investors.

The firm’s largest shareholder, AustralianSuper, which owns more than 17% of Origin, issued a statement saying that the “latest low-ball offer” supports its opinion that the offer remains materially below Origin’s long-term value. This position was expressed in response to a question regarding the offer.

The A$300 billion pension fund, which has a market value of around $195.24 billion, voted against the initial offer because, according to the fund, it significantly undervalued the company’s potential to profit from Australia’s transition to renewable energy.

In a statement, Brookfield reaffirmed its intentions to invest up to A$30 billion in Origin to reduce the company’s carbon footprint and significantly contribute to Australia’s emissions reduction ambitions.

The extraordinary conflict over Australia’s second-largest power producer demonstrates how huge investors desire exposure to the decades-long transition to renewable energy despite the difficulty of valuing assets in a sector prone to government intervention. This is the case even though the transformation is expected in Australia.

Under the newly provided conditions, Brookfield will continue to bid A$9.43 per share. However, some investors will be able to maintain their holdings in the energy markets company that Brookfield would hold.

Brookfield’s consortium partner, EIG Partners, would acquire the integrated gas business of Origin, which includes a 27.5% share in Australia Pacific LNG (APLNG).

Suppose the offer is unsuccessful in gaining the agreement of 75% of the company’s shareholders. In that case, an alternative plan that calls for Origin to sell its energy markets business to Brookfield in exchange for A$12.3 billion has been submitted.

In such a scenario, EIG would conduct an off-market takeover bid for the remaining portion of Origin, focusing on the APLNG share.

The shareholders of Origin would be entitled to receive A$9.08 per share, which would amount to a total of $10.2 billion, plus an extra A$0.22 per share if EIG obtained up to 90.1% ownership of Origin.

Just before the market closed on Thursday, Origin shares were trading 1.1% lower than the previous day for A$8.33.

The Chairman of the Company, Scott Perkins, said “absolutely” when he was asked during a news conference if he had any concerns with the amended arrangement.

DONE WITH THE TALKING

Blair Thomas, the chief executive officer of EIG, told Reuters that he was finished having conversations with AustralianSuper after the revelation of the improved offer. “What is frustrating is that at no point in time have they said what they would find acceptable,” he stated while being interviewed.

“We are going to provide an alternative where the majority of shareholders can control their own destiny,” said the executive.

Early in November, the Brookfield consortium offered A$6.59 in cash, $1.86 in cash, and a special dividend of A$0.39, equal to A$9.53 per share. However, the volatility of the foreign exchange markets has caused that amount to decrease to its current level.

According to the managing director of Origin, Simon Mawhinney, the fund manager Allan Gray, who holds around 3% of the company’s shares, backed the repeated offer. If the board recommends the alternative transaction, the consortium should be able to win the needed 50.1% votes, he added, forcing opponents to choose between backing the modified scheme or risking being left with a rump Origin that is stripped of its energy markets business. If the board recommends the other transaction, the consortium should be able to secure the votes.

“Those opposed to the scheme previously will find themselves between a rock and a hard place,” said Mawhinney. However, he explained that if the board decided not to support it, it would be doubtful to obtain the necessary votes.

The revised structure of the contract was announced on the same day that Australia’s Energy Minister, Chris Bowen, stated the country would raise expenditures to attract investment in 32 gigawatts of additional power capacity. This figure is comparable to half of the country’s current capacity for the national energy market.

In the statement, Origin stated that the exact ramifications on its company from the government’s “meaningful intervention” into the market remained undetermined, and investors should be given time to examine the possible repercussions of the situation.