AGL Energy rejects Cannon-Brookes’ unsolicited proposal

AGL Energy has rejected Atlassian co-founder Mike Cannon-Brookes’ bid with Canadian asset management firm Brookfield to take over the company, whose plans were to shut down AGL’s coal-fired power plants up to 15 years early.

Suggesting that their $8 billion bid for the nation’s largest powerhouse was a low ball offer, the AGL Energy board has stated that the proposal undervalued the business.

According to AGL Energy chairman Peter Botten, “The proposal does not offer an adequate premium for a change of control.

“The board believes AGL Energy shareholders would be forgoing the opportunity to realise potential future value via AGL Energy’s proposed demerger as both proposed organisations pursue decisive action on decarbonisation.”

The tech billionaire’s bid was priced at $7.50 per share, but investors pushed the share price up to $8.09 this afternoon.

Media reports suggest that Cannon-Brookes is determined to transform AGL into a net zero organisation, with a $20 billion renewables investment in the works.

The news comes a week after AGL announced it is bringing forward the closure of Bayswater and Loy Yang A power stations in NSW and Victoria by three years, with long term plans to develop the site as industrial energy hubs.

According to an AGL announcement this morning, “The AGL Energy Board considers that the Unsolicited Proposal, which was received on the morning of Saturday, 19 February 2022, materially undervalues the company on a change of control basis and is not in the best interest of AGL Energy shareholders."

The company confirmed its commitment to progressing its proposed demerger in order to establish the two separate entities of AGL Australia and Accel Energy.

AGL Energy’s decarbonisation plans include a 50 percent emissions reduction by 2030 for AGL Australia, and a 55 to 60 percent reduction by 2034 for Accel Energy. “AGL Australia and Accel Energy will continue to have access to the deep public and private capital markets to support their renewable energy development plans.”

Under the proposed demerger plans, both entities will focus on renewable and flexible generation capacity development, the company claims.