Approvals and price caps seen as biggest risks for original $18 billion takeover bid

The ACCC said it was contacted by Brookfield, EIG and Origin.

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“We expect a timely submission, but expect to conduct a public review where we will carefully consider any likely competitive impact resulting from the proposed transaction,” an ACCC spokesperson said.

While some observers see FIRB approval as “less problematic” because the two bidders are well known in Australia, Credit Suisse analyst Saul Kavonic has signaled that Treasurer Jim Chalmers could use the approval process to make pressure on suitors to make certain commitments. Origin’s Australia Pacific LNG (APLNG) venture is one of three east coast gas exporters in the crosshairs of intensifying federal government pressure to make more gas available to the domestic market at lower prices.

“FIRB approvals are important for proposed acquisitions of this nature, and the government could use its approval leverage to extract concessions on domestic gas prices,” Kavonic said.

A spokesperson for Chalmers said the transaction would be subject to regulatory processes and considerations, “so it is not appropriate to comment further at this time.”

As soaring fossil fuel costs drive up energy prices on Australia’s east coast, the Albanian government is debating a range of potential gas market interventions to tame sky-high bills, such as that setting price caps on local gas sales and stricter limits on how much gas can be shipped as LNG.

Investment bank Macquarie said Friday that government policies regarding gas and possibly coal could influence Origin’s earnings outlook and affect the consortium’s final offer price.

CLSA analyst Daniel Butcher said the consortium’s offer, with a 55% premium, was “highly likely to succeed”. “We view the deal as a knockout offer,” he said. “The terms are pretty standard – due diligence, ACCC, FIRB – so we think the chances of the deal becoming binding are pretty low.”

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