Mike Cannon-Brookes and Brookfield pull out of AGL takeover

Plans by tech billionaire and Atlassian co-founder Mike Cannon-Brookes and Canadian asset giant Brookfield to accelerate AGL’s intentions to shift into the renewable energy market have been rejected.  

Cannon-Brookes took to Twitter to announce that the Brookfield-led consortium, which includes Grok Ventures, Cannon-Brookes’ private investment company, is “putting our pens down”, after the Australian energy giant rejected a second takeover bid.

“Our path was the world’s biggest decarbonisation project. From Aus [sic],” Cannon-Brookes said. 

Under the second takeover bid, the consortium was offering AGL AU$8.25 per share, a 10% increase on the initial offering of AU$7.50 that was also rejected.

At the time of the first bid, the AGL board said the proposal “materially undervalues” the company and would not be in the “best interests” of shareholders.

This time, the AGL board said the proposal is “still well below” what it considers as the “fair value” of the company relative to what is expected to be delivered under the company’s proposed demerger.

“The revised unsolicited proposal continues to ignore the opportunity that AGL Energy shareholders have through our proposed demerger to realise potential future value,” AGL Energy chairman Peter Botten told shareholders on Monday.

Under AGL’s demerger plan, the company would be split into two separate businesses: AGL Australia would own the company’s power, gas, and telecommunications retailing business along with its clean energy assets, while Accel Energy would continue to hold onto its ownership of coal and gas-fired power generators in Australia.

“The proposed demerger will be a catalyst for the potential realisation of shareholder value. It will create two industry leading companies with distinct value propositions. It will allow each business to be valued separately and more positively by the market on the basis of their own specific business fundamentals,” Botten said.

However, according to Cannon-Brookes, proceeding with the demerger plan is “a terrible outcome for shareholders, taxpayers, customers, Australia and the planet we all share”.  

The proposed demerger is expected to be completed by 30 June 2022.

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