Should You Buy Origin Energy After the $20 Billion Takeover Collapsed?

When Brookfield's $20 billion takeover bid for Origin Energy (ASX: ORG) collapsed in December 2023, the market's reaction was swift and brutal. Shares plunged as investors mourned the lost premium. Yet two years later, a remarkable reversal has unfolded: the Origin Energy share price now trades 40% higher than Brookfield's rejected offer. For those who stayed patient, what looked like a missed payday became something better, a validation that the company's standalone value exceeded private equity's assessment. This pattern isn't unique to Origin, and it raises an important question for today's investors: Does the wreckage of a failed takeover create opportunity?

Australia's Energy Transition Creates Winners and Losers

Australia’s electricity sector is undergoing a major shift. As coal plants retire, companies face costly decisions about future energy sources. AGL Energy’s share price has dropped 42% over five years due to ageing coal assets and the cost of renewables.

Renewable energy is now cheaper; wind and solar can deliver power for under $50/MWh, challenging traditional generators. Companies with diversified assets like gas and LNG are better positioned than pure retailers.

From July 2026, the federal “Solar Sharer” scheme will require retailers to offer three hours of free electricity daily to eligible households, squeezing retail margins.

This transition is reshaping earnings, dividends, and long-term viability. Companies with upstream exposure or flexible generation portfolios are adapting faster, while others risk falling behind.

For investors seeking to navigate these complexities, ASR's Income Report provides in-depth analysis of which energy companies can sustain their dividends through the transition and which face cuts.

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When Rejected Bids Turn Into Wins

Australia's recent takeover history offers a surprising lesson: rejected bids often create better shareholder outcomes than accepted ones. Qoria's board rejected a $0.40 per share offer in April 2024, calling it opportunistic. The stock has since surpassed $1 billion in market capitalisation as its child internet monitoring software caught regulatory tailwinds.

In Origin's case, 69% of shareholders voted in favour of Brookfield's takeover, but AustralianSuper's opposition pushed the vote below the required 75% threshold. The superannuation fund's bet was simple: Origin's energy transition assets and integrated business model were worth more in shareholders' hands than under a private equity owner seeking quick returns.

How Origin Stacks Up Against AGL

The performance gap between Australia's two largest energy retailers tells the story of structural advantage. Origin reported a 26% profit rise to $1.49 billion in FY 2025, driven by its liquefied natural gas business, while AGL's profit fell 21% to $640 million.

Five-Year Performance Comparison:

• Origin Energy: +82% share price gain, 6.0% dividend yield
• AGL Energy: -42% share price decline, 5.2% dividend yield

Origin's integrated model, combining LNG exports, gas production, and retail operations, provides the earnings diversification that pure retailers simply cannot match during the energy transition.

The Verdict: Selective Buy Below $10.50

Origin Energy warrants a HOLD rating for existing shareholders, with selective buying opportunities on weakness below $10.50 for investors seeking energy transition exposure with downside protection.

The investment case rests on three pillars. First, the diversified earnings model has proven its resilience against sector headwinds. Second, management is on track to deliver $100-$150 million in cost reductions by FY 2026, improving margins even as retail conditions toughen. Third, the renewable energy and battery storage pipeline positions Origin to benefit from Australia's decarbonisation mandates rather than merely survive them.

 

Key risks remain: retail margin compression from government policies, rising coal procurement costs, and execution risk on the renewable energy buildout. These aren't trivial, but Origin's upstream assets provide a buffer that competitors lack.

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