Origin buy-out allowed
ACCC has approved the $18.7 billion Origin Energy takeover by Brookfield and MidOcean.
The Australian Competition and Consumer Commission (ACCC) has given the green light to Canada's Brookfield and its US-based partner, EIG, for their proposed acquisition of Origin Energy.
The decision paves the way for discussions on the deal's impact on shareholder value.
Brookfield says it intends to invest $20 billion in clean energy and storage in Australia as part of this deal, aiming to accelerate the nation's energy transition.
The ACCC's approval hinged on whether the acquisition would harm competition or if the public benefits outweigh the drawbacks.
“On the first limb of the test, we are not satisfied that the proposed acquisition would not be likely to substantially lessen competition. However, after a detailed review, we are satisfied that the proposed acquisition is likely to result in public benefits that would outweigh the likely public detriments,” ACCC Chair Gina Cass-Gottlieb said.
Origin Energy welcomed the ACCC's decision, calling it an “important milestone”.
Under the proposed takeover, Brookfield will acquire Origin's energy markets business, including power generation and retailing, while EIG's MidOcean Energy will take ownership of Origin's stake in the Australia Pacific LNG venture.
Brookfield argues that this acquisition will expedite Australia's energy transition, facilitating the $20 billion investment it plans to make in clean energy and storage.
Nonetheless, some shareholders and analysts contend that the offer price undervalues Origin, considering its improved performance, market outlook, and the growth of its UK affiliate, Octopus Energy.
The ACCC's approval comes with certain conditions, and the deal also requires consent from the Foreign Investment Review Board and Origin Energy shareholders when it goes to a vote.
While concerns about competition emerged due to vertical integration in the electricity supply chain, the ACCC determined that the acquisition would likely accelerate the rollout of renewable energy generation, aiding in reducing Australia's greenhouse gas emissions.
The ACCC acknowledged that some factors might limit the benefits, such as constraints in the electricity transmission network and potential investments by other parties if the acquisition does not proceed.
However, they concluded that the acquisition would increase the speed of renewable energy generation rollout, citing Brookfield's specific mandate and global experience in renewable energy investment.
On the downside, the ACCC expressed concerns about Brookfield's influence over AusNet and its potential to favour Origin's generators, potentially diminishing competition.
Despite some mitigating factors, including regulatory oversight, the ACCC says it remains cautious about subtle discrimination that could be difficult to detect.