Origin Energy now worth ‘far more’ than Brookfield bid: Perpetual

afr.com:

Fund manager Perpetual wants Origin Energy’s board and management to push suitors Brookfield and EIG Partners for a better deal than their agreed $18.7 billion price, recognising the target’s rapidly improved profitability and a growing consensus that Origin’s Eraring coal-fired power station will outlive its 2025 retirement date.

Vince Pezzullo, head of Perpetual’s Australian equities team, said Origin Energy’s outlook was substantially better than when it kicked off takeover talks with Brookfield and EIG this time last year, and since the board accepted a binding takeover offer in March.

Game on: Perpetual’s Vince Pezzullo (left), thinks Origin Energy’s performance and market developments make it worth more than when Brookfield’s Stewart Upson (centre) and Origin CEO Frank Calabria went through takeover talks.  AFR

Mr Pezzullo said there was a growing realisation that Origin’s Eraring coal-fired power station would need to stay open beyond its nominated 2025 closure, and an awareness that the company’s big customer load and gas-fired generators had it best placed to lead the energy transition.

Origin’s investment in Octopus Energy, a UK retailer and software platform, is also growing faster and earning more than anticipated, he said, while Origin’s single-most valuable asset – its stake in the Australia Pacific LNG project in Queensland – is generating valuable cash that could be used to fund renewables investment.

“The value of the business is materially higher than it was 12 months ago,” Mr Pezzullo told The Australian Financial Review.

“Conditions have changed materially. The bid was made when the expectation was these assets were retired earlier and it was a fair price. Now, we realise the national electricity