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Brookfield Bets $11.8 Billion On Australia’s Energy Transition

Brookfield Asset Management has led a consortium that looks set to acquire Australian utility Origin Energy for some $11.8 billion, a move that is seen as a way to access big opportunities in Australia’s clean energy transition.

Reuters noted in its report on the news that Origin Energy’s board has backed the Brookfield-led takeover.

Bloomberg reported that the deal, if completed, would be the third-largest acquisition in Asia. For Australia, it would be the largest since the start of the year, according to Reuters.

This is Brookfield’s second attempt to acquire the energy generator and distributor, which has some 4.5 million customers. Earlier this year, the asset manager approached the utility with a takeover offer again but that was rebuffed.

Now, with a higher price offered, representing a 55-percent premium to Origin’s share price, the company’s board has agreed to the deal.

According to Brookfield, Origin Energy appears to be well-positioned to benefit from transition efforts. To help accelerate these benefits, the buyers will invest another $12.8 billion (A$20 billion) in the company by 2030.

“The energy transition in Australia is a once-in-a-generation investment opportunity but that investment needs to be accelerated materially in order to meet Australia’s legislated climate goals,” said Brookfield’s CEO for the Asia Pacific, Steward Upson.

The consortium, which also includes an EIG-owned firm MidOcean Energy, will split Origin after the acquisition and manage its electricity generation and retail division and its LNG business separately.

Origin has a 27.5-percent interest in the Australia Pacific LNG project that will be managed by MidOcean Energy, while Brookfield focuses on the power utility business.

The deal is far from certain, however. “FIRB hurdles loom large for proposed acquisitions of this nature, and the government could use its approvals leverage to extract concessions on domestic gas prices,” Credit Suisse energy analyst Saul Kavonic told the Australian Financial Review earlier today.


By Charles Kennedy for Oilprice.com

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