Australia's clean energy plan muddles $10.6 billion takeover fight for Origin
By Lewis Jackson
SYDNEY (Reuters) — The long-term value of hotly contested $10.6 billion takeover target Origin Energy has been muddied by a government plan to accelerate the rollout of renewable energy, announced just hours before a key shareholder vote.
The Australian government announced plans on Thursday to underwrite 32 gigawatts (GW) of new wind, solar and battery projects. Two energy experts told Reuters it could spur investment worth at least A$30 billion ($20 billion). The announcement contained no figures.
The plan to reshape the electricity market, where Origin is the second largest power producer, has scrambled the outlook for electricity prices, future investments, and existing plants.
It was released just before Origin announced a last-minute revised offer from Brookfield and EIG as it became clear investors would reject the consortium's earlier bid. Origin's board delayed the vote to Dec. 4 to consider the bid and the impact of the 32 GW scheme.
The uncertain outlook for Origin under the government's new policy has made some investors say it makes more sense than ever to sell to the suitors, but top shareholder AustralianSuper is adamant it wants to hold on.
More renewables will ultimately lower electricity prices, squeeze margins and shorten the life of Origin's existing coal and gas assets, said Max Vickerson, an equity analyst at Morgans.
«This move accelerates the destruction of value at the legacy assets owned by Origin and AGL,» he said, referring to Origin's rival AGL Energy (OTC:AGLXY). «Cheaper wholesale prices are not a good thing on balance for Origin.»
However, the potential for new investment via the government's scheme undercuts Brookfield's argument that Origin and Australia needed its deep
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