ASX:ORG
Origin Energy Ltd
Investment Summary
The fund managers believe that Origin Energy Ltd held significant underlying value, which was ultimately recognised by the takeover offer from a consortium led by Brookfield Asset Management and MidOcean Energy. In their opinion, the proposed $9.00 per share offer—representing a 55% premium to the pre-announcement share price—validated their prior investment thesis and highlighted the company’s strategic and financial appeal. They note that the offer followed two earlier, lower bids that were rejected, suggesting strong buyer interest and reinforcing the attractiveness of Origin’s asset base and growth prospects. Despite the positive market reaction and share price rally, the fund managers opted to exit their position. In their view, although the bid reflected compelling value, there remained execution risks around due diligence, regulatory approvals, and potential deal completion. As such, they judged that the risk-reward balance had shifted following the offer and decided to realise gains. Overall, the fund managers viewed the takeover proposal as a confirmation of Origin’s strong fundamentals and potential for re-rating, but considered the associated deal uncertainty sufficient to warrant taking profits and reallocating capital to higher conviction ideas.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
L1 Capital
Date
30 Nov 2022
Price
$7.86
Medium
Monthly Report
Commentary
L1 Capital Long Short Fund decided to exit its position in Origin Energy after the company received a takeover offer at $9.00 per share from a consortium led by Brookfield Asset Management and MidOcean Energy. This offer represented a 55% premium to Origin's share price before the announcement and followed two previously rejected offers. While the takeover bid aligns with L1 Capital's view on the upside potential of the company, risks remain regarding the completion of the deal, including due diligence and regulatory approvals. Given these uncertainties, L1 Capital opted to realize gains and exit the position, despite the attractive premium offered in the bid.
L1 Capital
Date
31 Dec 2022
Price
$7.59
Medium
Monthly Report
Commentary
L1 Capital Long Short Fund decided to exit its position in Origin Energy following the announcement of a takeover offer from a consortium led by Brookfield Asset Management and MidOcean Energy at $9.00 per share, which represented a 55% premium to Origin's pre-offer share price. While the offer acknowledges the upside potential L1 Capital had identified in the company, the fund decided to sell due to risks related to the deal's completion, such as due diligence and regulatory approvals. Despite the strong offer, L1 Capital remains cautious about the potential challenges in finalizing the transaction and opted to realize gains at this point.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.