By Scott Murdoch and Lewis Jackson
SYDNEY (Reuters) -A Brookfield-led consortium has accused Origin Energy's largest shareholder, AustralianSuper, of "holding the company hostage" after it rejected a sweetened "best and final" A$16.4 billion ($10.55 billion) takeover offer for Australia's biggest energy retailer.
If a shareholder vote fails as a result, Brookfield has also offered a back-up plan of an off-market takeover bid that would require the minimum acceptance of 50.1% of the register, giving it control of the Origin's board and business plan even if the nation's largest pension plan refuses to accept the offer.
AustralianSuper said on Thursday the consortium's A$9.53 per share offer, an 8% increase over the previous A$8.81 apiece bid, remained "substantially below" its estimate of Origin's long-term value.
"They are holding the company hostage, they are standing in the way of other people getting a big cash payment and not having to invest in the (energy) transition going forward," Luke Edwards, head of Brookfield's renewable power and transition for Australia, told Reuters in an interview.
"Brookfield is not a bottomless pit of money, we are a financial institution, we have a fiduciary duty to our investors to be good stewards of that capital and allocate that capital appropriately."
AustralianSuper, which said it believed Origin had a highly strategic portfolio of assets that would benefit from an energy transition to renewable power, declined to comment further.
Edwards said Brookfield would push on with a shareholder vote on Nov. 23 and urge other investors to back the offer rejected by AustralianSuper, which has a 13.68% stake that could scupper a deal requiring 75% approval depending on the turnout.
Origin shares closed 6.6% lower at A$8.47 after AustralianSuper's rejection, though remained well above the A$5.81 closing price prior to Brookfield's first public bid nearly a year ago.
AustralianSuper's stand illustrates the power of a homegrown pension sector in a market where A$2.4 trillion in professionally managed retirement assets are on par with the value of the local bourse.
"The increasing clout of the big industry funds enables them to push for better outcomes including in M&A transactions," said Saul Kavonic, an energy analyst.
The Brookfield-led consortium, which also includes EIG's MidOcean Energy, said the increased offer was its "best and final" proposal, meaning it cannot be increased unless a rival offer emerged.
'BACK TO THE DRAWING BOARD'
AustralianSuper, which manages A$300 billion in assets, on Tuesday had already rejected the prior offer, saying it was "substantially below" its estimate of long-term value as the country moves toward net-zero emissions by 2050.
The offer is above the $A8.45 to A$9.48 per share valuation range contained in an independent expert's report examining the previous offer, though that outlined a "roll forward" calculation that shares could be worth an additional 40 Australian cents by the time the takeover is due to close.
"If AustralianSuper is rejecting it, the likelihood of the deal going ahead is very low," said Jamie Hannah, deputy head of investments and capital markets at VanEck, which owns a 0.3% stake in Origin. "I think the deal is back at the drawing board at the moment."
Simon Mawhinney, managing director of fund manager Allan Gray which owns about 3% of Origin shares, supported the fresh offer but said the opposition would likely scupper the deal, potentially opening the way for the off-market route.
The rejection put AustralianSuper at odds with Origin's board, which said on Thursday it unanimously recommended the deal barring a stronger rival bid.
Brookfield pitched its renewed offer as vital for speeding up Australia's transition to renewable energy, a stance the country's competition regulator agreed with when it approved the deal last month.
Brookfield Asia Pacific CEO Stewart Upson said the consortium planned to invest $A20 billion to A$30 billion in Origin over the next decade and build more renewable capacity than the company would otherwise.
AustralianSuper, however, has argued the bid undervalues Origin's ability to profit from the transition, in particular because of its customer base and stakes in renewable energy player Octopus Energy and the Australia Pacific LNG project (APLNG).
Should the deal close, the consortium will divide up Origin, with Brookfield and its partners GIC and Temasek taking the power generation and retailing business.
MidOcean, in which Saudi Arabia's Aramco (TADAWUL:2222) recently bought a stake, would take over the integrated gas business, including the 27.5% stake in APLNG.
($1 = 1.5640 Australian dollars)