An influential shareholder advisory firm has backed North American consortium Brookfield and EIG’s takeover of power giant Origin Energy. It’s the first group to favour the $20 billion bid even as major shareholder AustralianSuper doubles down on its opposition.
The consortium’s revised offer was at an 8 per cent premium to the $8.81 per share cash payment outlined in a scheme agreement backed by Origin’s board in March and above an independent expert’s valuation range of $8.45 to $9.48 per share at the end of June. AustralianSuper insists the bid is still substantially below its estimate of Origin’s long-term value.However, proxy advisor ISS has now backed the deal, saying Brookfield and EIG’s initial tilt at Origin came during a time when the power firm was weakened by volatile energy markets. The latest offer was at “least at the bottom of a reasonable range of fair values and includes a reasonable premium to the stock price absent a takeover,” ISS told its investor clients.
“The company has a strong market position and potential funding to finance such a transition, though energy price volatility, regulatory uncertainty and large project execution make the payout rather uncertain. It is the company’s structure and exposure to many key variables outside its control that has caused volatility in cash flows, led to the board to recommend the offer and caused debate around valuation.
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