Investment and acquisition | Large transactions | Industry giants | Origin Energy’s development far exceeds expectations after leaving parent company Boral.
Recently, the acquisition of Origin Energy by Canadian investment giant Brookfield and private equity investment group EIG for AUD 18.7 billion has attracted widespread attention. When Origin Energy was spun off from the building products group Boral in the early 2000s, it was unknown what the future growth potential of Origin Energy would be. Tony Berg, a current director of investment bank Gresham Partners and a key decision-maker and promoter at the time of the split, said that investors in the late 1990s did not evaluate the future growth potential of Boral’s energy division.
Tony Berg was a well-known investment banker who served as chairman of Macquarie Bank from 1985 to 1993 and then as CEO of Boral in 1994. In early 2000, Boral’s shareholders voted overwhelmingly to split the company in two, with the newly formed Origin Energy led by former AGL executive Grant King, who was persuaded by Mr. Berg to move from AGL to energy business in 1994. At that time, Origin Energy’s revenue was about AUD 1 billion, which reached AUD 14.5 billion in 2021-22.
This $18.7 billion acquisition deal demonstrates the enormous value created by the decision to separate energy business from Boral’s building products business 23 years ago. In fact, Brookfield is not the only overseas group “pursuing” Origin; as early as 2008, UK natural gas company BG Group proposed a $13 billion acquisition, but BG Group “returned empty-handed.” After BG Group’s AUD 13 billion bid was rejected and eventually withdrawn, Origin teamed up with US giant ConocoPhillips and China National Chemical Corporation to establish a AUD 25 billion joint venture for liquefied natural gas in Australia and the Pacific, one of three giant liquefied natural gas projects being built simultaneously in Queensland.
In its first few years as an independent ASX-listed company, Origin actively expanded its asset base, buying a 51% stake in New Zealand’s Contact Energy in 2004 and selling it in 2015; acquiring Sun Retail in 2007; acquiring Country Energy and Integral Energy in 2011 to become Australia’s largest energy company; and acquiring Eraring coal-fired power station in New South Wales in 2013, Australia’s largest power station, further expanding Origin’s asset base and becoming one of the industry giants.
