Australian Super rejects takeover of Origin Energy


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Origin Energy shareholders this week rejected the takeover bid by Canadian asset management company Brookfield and US-based EIG and their attempts to privatise our country's largest energy provider.

I have to say I hate great Australian companies falling into the hands of overseas companies and being taken off our exchange, especially if the company is acquired for less than its real value.

Also, I have issues with larger shareholders agreeing to these takeovers to gain in the short term rather than looking at the bigger picture. The rejection by shareholders marks the end of a 13-month corporate drama, making it Australia's largest and lengthiest takeover.

origin energy takeover bid australiansuper

Surprisingly, the main shareholder blocking this deal was AustralianSuper, as it believed that Origin Energy's value and future are better served in the hands of members and shareholders rather than a private equity consortium looking for quick returns.

I am glad to see AustralianSuper, whose members are everyday Australians, stand up to block this $20 billion takeover bid.

AustralianSuper, which holds a 17% stake in Origin Energy, said the offer, priced at $9.39 per share, was 'low-ball' despite 69% of shareholders supporting the bid.

For the offer to be accepted, Australian takeover rules require approval from at least 75% of the shareholders, which means the offer fell well short.

Brookfield and EIG's bid aimed to utilise Origin as a vehicle to lead Australia's transition from coal-powered electricity to renewable energy.

However, shareholders, including Australian Super, believed the offer undervalued Origin, especially considering the company's rising profitability and increased stake in UK energy firm Octopus.

The bid's failure highlights the influence of major shareholders, who are often big institutions, in determining the fate of significant deals. In my humble opinion, we need more institutions to look at the bigger picture.

Given what transpired this week, we cannot underestimate the role that AustralianSuper played in opposing the bid for Origin. Superannuation companies are growing larger by the day and increasingly have more power, so I hope others are looking at the lead shown this week by AustralianSuper.

I also hope that we continue to see more shareholder resistance, and why I strongly advocate for direct share ownership by Australians to protect our valuable resources and companies.

Currently the share price of Origin Energy is down more than 16% since the announcement, which is exciting for those who don't hold the stock. If it was undervalued at $9.39 a share, then there is some good upside to come.

I'd be keeping an eye on this stock as the price will eventually find support, and investors who are watching could grab a nice opportunity.

It's not often you get a second chance to buy part of a quality company that has shrugged off a multibillion-dollar offer.

What are the best and worst-performing sectors this week?

The best-performing sectors include Real Estate, up more than 3%, followed by Information Technology and Consumer Staples, with both up more than 2%.

The worst-performing sectors include Energy, down more than 2%, followed by Utilities, just in the red and Industrials, just in the green for the week so far.

The best-performing stocks in the ASX top 100 include Alumina, up more than 14%, followed by Block, up more than 7%, and The A2 Milk Company, up more than 5%.

The worst-performing stocks include Evolution Mining, down more than 9%, followed by QBE Insurance, down more than 4% and IGO, down more than 3%.

What's next for the Australian stock market?

There is a saying that all good things come to those who wait, and over the past few weeks and months, I have urged everyone to be patient as the time to buy some great stocks will come.

While I was positive, I was still being very cautious given how many false triggers we have seen in the past few years. However, this week, our patience has been rewarded as we have seen the All Ordinaries Index rise more than 1% to its highest level in 11 weeks.

Last week, I mentioned that for me to be more positive, the price needed to continue to rise this week above 7334 points, which is what has occurred.

But what I am even more excited about is that this current move is being driven by the big end of town, with the Financials and Materials sectors both rising more than 1%.

We need to remember that the top 20 stocks in our market make up around 50% of the market capitalisation, so for our market to gain momentum in a particular direction we need to see these stocks move.

Right now, there are many stocks in the top 20 looking great including CBA and WES. While it is a little too early for CSL, MQG and COL, these stocks are worth putting on your watch list.

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Dale Gillham is chief investment analyst at Wealth Within Limited (AFSL 226347). He also serves as the head trainer at the Wealth Within Institute (RTO 21917). He has more than three decades of experience in the investment industry, and is the author of How to Beat the Managed Funds by 20%, Dale's qualifications include an Advanced Diploma and a Diploma of Share Trading and Investment. He co-hosts the Talking Wealth Podcast, and his work has appeared in The Australian Financial Review, New York Business Journal, Wall Street Select and more.