Origin Energy shares higher as date is set for shareholder vote on takeover

Origin has lodged a scheme booklet and notice of scheme meeting with the ASX.

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Origin Energy Ltd (ASX: ORG) shares are marginally higher at $9.22 amid news that shareholders will vote on the proposed takeover by Brookfield and MidOcean on 23 November.

The electricity and gas retailer lodged a scheme booklet and notice of scheme meeting with the ASX today. This followed the NSW Supreme Court approving this action yesterday.

The initial proposed takeover price of $8.91 per share has been lowered to $8.81 due to foreign currency movements. The proposed price has a US dollar component, and the price may change again later.

Origin shareholders should receive their booklets via email or post early next week.

Origin Energy shares lift as independent expert gives green light

The scheme booklet reveals that the independent expert, Grant Samuel, has concluded that the scheme is fair and reasonable.

Samuel says the takeover is in the best interests of Origin shareholders unless someone else offers a better deal.

The Origin board unanimously recommends that shareholders vote in favour of the takeover. All board members intend to vote yes.

Here's how the takeover price breaks down

The total cash payment of approximately $8.81 per share (subject to currency fluctuations) comprises three components.

  • Consideration of AU$6.25 per Origin share
  • A fully franked special dividend of 39 cents, which Origin says it intends to pay but has yet to formally declare it. This will be deducted from the AU$6.25
  • Consideration of US$1.64 per Origin share held (based on a USD/AUD exchange rate of 0.64, hence an implied value of AU$2.56), which will be converted and paid in Australian dollars (unless a valid currency election is made to receive US dollars)

But the takeover price is lower than the current price!

Origin chair Scott Perkins addressed this matter at the annual general meeting yesterday.

He said the board had considered the business's improved outlook when it agreed to the revised takeover bid in March.

On the day Origin announced it had signed the binding scheme of implementation, Origin Energy shares closed at $8.17.

In his AGM speech, Perkins said:

At the time of signing the Scheme Implementation Deed, the Board had visibility of various factors shaping the outlook for the business and this was taken into account when deciding whether to enter into this agreement on the terms on which it did.

Perkins also said the takeover was now factored into the Origin Energy share price, commenting:

Shareholders should note that the trading price of Origin shares is impacted by the proposed
Scheme and that the share price may not necessarily trade at these levels in the absence of
the proposed scheme. If the scheme does not proceed, the share price may fall.

Top broker Macquarie recently suggested that the fair market value for Origin Energy shares is now between $9.49 and $10.08 per share.

Motley Fool contributor Bronwyn Allen has positions in Macquarie Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brookfield Corporation and Macquarie Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Brookfield. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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