IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

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<li>
<a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a> has disclosed a revised non-binding proposal from Brookfield/EIG. The headline price has been lowered by -1.1% from A$9.00 to A$8.90 per share.</li>
<li>Under the revised proposal, shareholders’ first 100,000 shares get A$8.90. Beyond that ownership, the offer is A$4.334 plus US$3.194 per share (currently worth A$8.99 per share). </li>
<li>While the recut introduces FX rate risk, the average implied value is A$9.01 since 10 November. Both the offeror and the Board seem keen to get a binding offer.</li>
</ul>



Origin Energy (ORG AU) has disclosed a revised non-binding proposal from Brookfield/EIG. The headline price has been lowered by -1.1% from A$9.00 to A$8.90 per share.
Under the revised proposal, shareholders’ first 100,000 shares get A$8.90. Beyond that ownership, the offer is A$4.334 plus US$3.194 per share (currently worth A$8.99 per share). 
While the recut introduces FX rate risk, the average implied value is A$9.01 since 10 November. Both the offeror and the Board seem keen to get a binding offer.


Origin Energy (ORG AU): Recut Deal Is a Win-Win

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<li>
<a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a>’s exclusivity agreement with Brookfield/EIG expired on 24 January. Brookfield/EIG is reportedly continuing its due diligence on its A$9.00 per share offer.</li>
<li>Time often kills deals. There is speculation that recent price caps would result in Brookfield/EIG walking away or trying to recut the deal terms. ACCC approval is also an overhang.</li>
<li>Peers' share prices have risen despite the price cap which weakens the case for a recut to the deal terms. Brookfield/EIG clearly want Origin as it twice bid against itself. </li>
</ul>



Origin Energy (ORG AU)’s exclusivity agreement with Brookfield/EIG expired on 24 January. Brookfield/EIG is reportedly continuing its due diligence on its A$9.00 per share offer.
Time often kills deals. There is speculation that recent price caps would result in Brookfield/EIG walking away or trying to recut the deal terms. ACCC approval is also an overhang.
Peers' share prices have risen despite the price cap which weakens the case for a recut to the deal terms. Brookfield/EIG clearly want Origin as it twice bid against itself. 


Origin Energy (ORG AU): Risk/Reward Profile

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Brookfield and EIG/MidOcean are Offering <a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a> shareholders $9.00/share, a 54.9% premium to last close, by way of a Scheme. The Offer is non-binding and indicative.</li>
<li>Negotiations kicked off at $7.95 for the LNG developer in early August. Exclusive due diligence has been granted. </li>
<li>A firm offer will be contingent on ACCC and FIRB approval. Such a takeover may actually play into the Albanese government's future energy plans.</li>
</ul>


Brookfield and EIG/MidOcean are Offering Origin Energy (ORG AU) shareholders $9.00/share, a 54.9% premium to last close, by way of a Scheme. The Offer is non-binding and indicative.
Negotiations kicked off at $7.95 for the LNG developer in early August. Exclusive due diligence has been granted. 
A firm offer will be contingent on ACCC and FIRB approval. Such a takeover may actually play into the Albanese government's future energy plans.


Origin Energy: Brookfield's Energy Transition Bet

<ul>
<li>
<a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a> received a conditional, non-binding indicative proposal from Brookfield and EIG at A$9.00 per share, a 54.9%  premium to the undisturbed price (9 November).</li>
<li>The Board will grant eight weeks of due diligence access and intends to unanimously recommend a binding offer at A$9.00 per share. The offer is attractive.</li>
<li>Regulatory approvals are an overhang and would likely require price concessions. At the last close, the gross spread to the offer is 14.9%.</li>
</ul>



Origin Energy (ORG AU) received a conditional, non-binding indicative proposal from Brookfield and EIG at A$9.00 per share, a 54.9%  premium to the undisturbed price (9 November).
The Board will grant eight weeks of due diligence access and intends to unanimously recommend a binding offer at A$9.00 per share. The offer is attractive.
Regulatory approvals are an overhang and would likely require price concessions. At the last close, the gross spread to the offer is 14.9%.


Origin Energy's (ORG AU) Indicative Offer of A$9.00 from Brookfield/EIG

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<li>The <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0607/2022060700001.pdf" target="_blank" rel="noopener">rejection</a> of <a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy (1171 HK)</a>'s proposal by <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a> independent board was always on the cards.</li>
<li>Yet the bigger question remains - why was this unorthodox structure, involving the issuance of H-Share convertible bonds, tabled in the first place?</li>
<li>Back in Yankuang's court. Revise terms? Walk away? To note, Yancoal has not, to date, received any formal offer or proposal from Yankuang.</li>
</ul>


The rejection of Yankuang Energy (1171 HK)'s proposal by Yancoal Australia (3668 HK) independent board was always on the cards.
Yet the bigger question remains - why was this unorthodox structure, involving the issuance of H-Share convertible bonds, tabled in the first place?
Back in Yankuang's court. Revise terms? Walk away? To note, Yancoal has not, to date, received any formal offer or proposal from Yankuang.


Yancoal, Not Surprisingly, Rejects Yankuang's Proposal

Australia

AusNet Services is an energy delivery service provider. The Company engages in electricity distribution and transmission, and owns gas distribution assets in Victoria, Australia.

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Ausnet Services (AST AU)

Origin Energy (ORG AU): Recut Deal Is a Win-Win

The revised terms imply a modest deal cut and acceptable FX rate risk. Expect a binding offer soon. Regulatory risks will be the key overhang.

Arun George

Origin Energy (ORG AU): Risk/Reward Profile

The risk-reward profile is favourable as the downside due to a deal break (-11% estimated decline) is lower than the upside (+23%) to the...

Arun George

Origin Energy: Brookfield's Energy Transition Bet

The Offer remains non-binding. I think a firm Offer will get up - but the final pricing may change subject to discussions with the government on...

David Blennerhassett

Origin Energy's (ORG AU) Indicative Offer of A$9.00 from Brookfield/EIG

The offer is attractive. Regulatory approvals are an overhang and would likely require price concessions. At the last close, the gross spread to...

Arun George

Yancoal, Not Surprisingly, Rejects Yankuang's Proposal

There is no firm Offer. It's not at all certain one will be pitched, and one that is considered representative - and less quirky. For now, a bet...

David Blennerhassett

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