Origin Energy shares rise on special dividend plans

Origin has announced a generous special dividend that will be paid if its takeover completes.

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Male hands holding Australian dollar banknotes, symbolising dividends.

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Origin Energy Ltd (ASX: ORG) shares are pushing higher on Monday morning.

At the time of writing, the energy giant's shares are up 2.5% to $8.87.

Why are Origin shares rising?

Investors have been buying the company's shares this morning after it announced plans to pay a special dividend if its takeover is completed successfully.

According to the release, the Origin board has determined to pay a fully franked special dividend of 39 cents per share. This equates to a 4.5% dividend yield based on where Origin shares finished last week.

If the takeover is approved by Origin shareholders at its scheme meeting on 23 November, and the required court and regulatory approvals are obtained, the special dividend is expected to be paid on 23 January.

Takeover value

Based on the above, the proposed takeover's total cash payment to shareholders of approximately $9.531 per Origin share comprises:

  • Scheme consideration of $6.20 per share
  • Scheme consideration of US$1.86 per share
  • A fully franked special dividend of 39 cents per share

The Origin board continues to unanimously recommend that Origin shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to the independent expert continuing to conclude that it is in the best interests of shareholders.

However, its largest shareholder, Australian Super continues to believe the offer undervalues the company. The super fund recently stated:

AustralianSuper intends to vote its shares in Origin Energy (Origin) against the best and final offer from the Brookfield and EIG-backed consortium announced today. The offer from the consortium remains substantially below our estimate of Origin's long-term value.

The scheme meeting later this month should be very interesting viewing.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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