The Origin Energy Ltd (ASX: ORG) share price is soaring this morning despite news the consortium looking to acquire the energy provider has lowered its offer price.
After an extended due diligence period, the consortium comprising Brookfield Asset Management and MidOcean has dropped its bid to $8.90 per share. That's 1.11% lower than its previous $9 per share offer.
After open this morning, the Origin share price shot to a high of $8.02, a jump of 14% on yesterday's close. Right now, the Origin share price is $7.91, 12.84% higher than its previous close.
Let's take a closer look at the latest news from the S&P/ASX 200 Index (ASX: XJO) energy company.
Origin share price rockets as takeover bid dropped to $8.90
The Origin share price is taking off this morning as the company backs a newly-reduced takeover bid.
It follows a drawn-out due diligence period. Thus, the market may be relieved to learn the suitors are still interested after flicking through the takeover target's books. Though, the Origin share price remains notably lower than the offer price, perhaps suggesting investors remain wary of the deal.
Origin's board still thinks the lower bid "has the potential to deliver significant value to shareholders". Thus, it's vowed to continue discussions with the consortium.
The now-$8.90 per share offer will stand for the first 100,000 stocks held by an investor. After that, shareholders will receive $4.334 and US$3.194 per share – equivalent to $8.90 at an exchange rate of 70 US cents for every Aussie dollar.
That will be reduced by any dividends paid by Origin between now and the takeover's completion. Of course, that includes the 16.5 cents per share fully franked dividend the ASX 200 constituent revealed last week.
The US dollar consideration reflects the underlying exposure of Origin's integrated gas assets. Specifically, cash distributions from the 27.5% interest in Australia Pacific LNG.
The offer is conditional upon a number of matters including regulatory approval and black box due diligence.
Brookfield and MidOcean first put forward their $9 per share bid in November. At the time, it represented a near-55% premium to the Origin share price and valued the company at more than $18 billion.
Back then, Origin said it had rejected an offer of between $8.70 per share and $8.90 per share from the consortium in September.
