Looks like more time needed.Canada’s Brookfield and US private...

Looks like more time needed.

Canada’s Brookfield and US private equity firm EIG Partners are expected to request more time to shore up a joint $18.4 billion bid for Australia’s Origin Energy, after struggling to pull the ambitious deal together over the holiday period.

With Brookfield/EIG’s exclusive look at Origin’s books due to expire at the close of business on Monday, sources said the bidders likely needed more time in the data room to help value Origin’s two businesses (energy markets and its stake in Australia Pacific LNG), line up funding and be in a position to negotiate a binding deal.

Origin Energy’s suitors are trying to lock in an $18.4 billion buyout at a time when policy settings are changing.

While the situation was evolving on Sunday, the most likely scenario would have Brookfield and EIG request another extension.

The pair’s exclusive look at Origin’s books was already extended once, to January 16.Origin’s board, having been in discussions with Brookfield in August, would have to decide whether to roll forward the exclusivity agreement.

The board’s expected to at least ask the bidders to re-state their interest in acquiring the company at the $9 a share indicative bid price, before granting anything.It’s a delicate situation, with Brookfield and EIG Partners trying to firm up their offer while much of corporate Australia has been on holiday.

More importantly, there have been potentially material policy changes involving gas and coal prices, which remain in flux. Relations between Origin and its bidders were said to remain cordial.There’s a bit of nervousness among investors, including global hedge funds that specialise in M&A-based trading strategies, as there has been since the $18.4 billion indicative bid was announced on November 10.

Time is often an enemy in M&A deals, particularly in industries like energy where there are many moving parts and in deals requiring large funding commitments.

Origin shares last traded at $7.63, or a 15 per cent discount to the indicative offer price.The delays are unlikely to come as a major surprise to Barrenjoey, Jarden and HSF-advised Origin, which foresaw the potential for a drawn-out situation and negotiated compensation for its shareholders.

The board had Brookfield/EIG’s indicative bid include a 3¢ a month “ticking fee” that would kick in on May 15 and increase the bid price monthly after that date.