The recent travails we’ve seen in global markets and the finance sector in particular haven’t scared off potential bidders for two local companies: Origin Energy and distiller United Malt.
…………
It’s now up to the regulators after Origin Energy (ASX: ORG) finally said yes to the long running, $18.7 billion, $8.91 per share bid from Canada’s Brookfield and Washington-based energy investor EIG.
The agreement ends a long period of due diligence, assessment of political changed to the Australian energy market and more than four months of talks.
Now the fate of the deal rests in the hands of the Foreign Investment Review Board (FIRB) and the competition regulator, the ACCC.
Brookfield faces pressure to in Victoria where it owns electricity transmission and distribution network operator AusNet.
That clearly cannot be kept by Brookfield (and a group of co-investors) bought for $18 billion in early 2022.
Brookfield’s Ausnet group, included Sunsuper Superannuation Fund, Alberta Investment Management Corporation, Investment Management Corporation of Ontario and Healthcare of Ontario Pension Plan.
Brookfield’s partners in the Origin deal (besides EIG) include Singapore giants, Temasek and GIC, the Singaporean governments two main investments funds. Interestingly AustNet was partially owned by Singapore Power, which is controlled by Temasek.
Resolving this potential impasse will take a lot of effort because $18 billion is a big ask and Brookfield will do its best to keep as much of AusNet as possible.
In its bidding case, Brookfield has consistently played the ‘switch to renewables’ card to bolster its chances.
Brookfield says it believes Origin will play a lead role in helping Australia meet its climate targets.
Brookfield has promised it will invest another $20 billion to build an additional 14 gigawatts of renewable energy and storage to help replace the looming closure of Origin’s Eraring coal-fired power plant in NSW and transform Origin into Australia’s largest clean energy owner by the end of the decade.
“We will build on the success of our global renewable power and transition business where we have a mandate to ‘go where the emissions are’ in putting billions of dollars behind an executable plan to reduce emissions at Origin,” Brookfield Asia-Pacific CEO Stewart Upson said.
“The board is unanimous in its view that this transaction is in the best interests of shareholders,” Origin chairman Scott Perkins said on Tuesday.
“The transaction represents a significant premium to the share price prior to the original indicative proposal, and reflects the strategic nature of Origin’s platform, its growth prospects and anticipated earnings recovery.”
EIG has more modest ambitions – to make money out of exports of LNG here and offshore. It which wants Origin’s 27.5% interest in the Australia Pacific LNG (APLNG) gas venture in Southeast Queensland.
In late 2022, EIG bought Tokyo Gas’s interests (small) in four Australian LNG projects -Gorgon LNG, Ichthys LNG, Pluto LNG and Queensland Curtis LNG for total cash consideration of $US2.15 billion.
Origin shares closed at $8.17.
…………
And French agrifood group InVivo revealed a $5 per share indicative bid for United Malt Group (ASX: UMG).
ASX trading in United Malt’s shares was suspended on Monday pending an announcement on a change in control of the company. The halt was lifted Tuesday when UMG revealed the approach from the French company.
UMG shares last traded at $3.44 on Friday valuing the company at just over $A1 billion. Media reports Tuesday suggesting the UMG board was looking for a price of $5 per share were confirmed by the company.
UMG shares jumped to $4.51 on Tuesday.
United Malt Group produces malt for brewers, craft brewers, distillers and food companies. It has processing plants in Canada, the US, Australia and the UK.
InVivo is bidding through a subsidiary called Malteries Soufflet, which was acquired last year.
The French company says it aimed to become the world’s top malt producer within five years through takeovers and not internal expansion.
To help finance the acquisitions it had sold a minority share of the malt business to several investors including US private equity giant, KKR and French bank, Credit Agricole.
In its statement on Tuesday, UMG revealed that the french group had made a number of approaches in recent times at steadily increasing prices.
“The indicative Proposal follows an unsolicited approach from Malteries Soufflet and its major shareholder, the InVivo Group (InVivo), to United Malt regarding a potential combination of United Malt and Malteries Soufflet.
“After a period of preliminary engagement, the United Malt Board determined that it was in the best interests of United Malt Shareholders to provide limited non-public information about United Malt to Malteries Soufflet and InVivo on a confidential and non- exclusive basis.
“Following the provision of this information, Malteries Soufflet submitted several confidential, non-binding and indicative proposals to acquire 100% of United Malt Shares: On 16 December 2022, for $4.15 in cash per share; on 6 February 2023, for $4.50 in cash per share; on 8 March 2023, for $4.90 in cash per share; and on 14 March 2023, Malteries Soufflet submitted the Indicative Proposal at the Indicative Proposal Price of $5.00 in cash per share.”
“After careful consideration of the Indicative Proposal (including consultation with its financial and legal advisers), the United Malt Board unanimously determined that it is in the best interests of United Malt Shareholders as a whole for United Malt to engage with and provide due diligence access to Malteries Soufflet to assist it to provide a binding proposal in respect of the Potential Transaction to the United Malt Board<UMG said on Tuesday.
At the start of March, the French company completed the takeover of small Belgian Maltster, La Malterie du Château for an undisclosed amount.
