AGL bats away Brookfield bid

BY Richard Summerfield

AGL Energy has rejected an unsolicited, sweetened $4bn takeover offer from tech billionaire Mike Cannon-Brookes of Grok Ventures and Canadian investment management firm Brookfield Asset Management. The offer, according to AGL, undervalued the company.

“The AGL Energy Board considers that the Revised Unsolicited Proposal is still well below both the fair value of the company on a change of control basis and relative to the expected value of the proposed demerger, and therefore is not in the best interests of AGL Energy shareholders,” noted AGL in a statement.

The revised proposal was for A$8.25 a share, a 15 percent premium to AGL’s share price on 18 February. The first proposal from the Brookfield-led consortium would have seen AGL shareholders receive A$7.50 per share.

“The revised unsolicited proposal continues to ignore the opportunity that AGL Energy shareholders have through our proposed demerger to realise potential future value,” said Peter Botten, chairman of AGL Energy. “It also ignores the momentum we have recently seen in the business through our solid half-year result, strong progress on the demerger, strong interest in our Energy Transition Investment Partnership and the improvements we are seeing in forward wholesale prices.”

The consortium’s proposal to spend between A$10bn and A$20bn in large-scale renewable energy and batteries to enable the early closures of AGL’s power stations that account for 8 percent of Australia’s overall greenhouse gas emissions “would have been the world’s biggest decarbonisation project”, according to Mr Cannon-Brookes. In response to AGL’s rejection of the offer, Mr Cannon-Brookes tweeted that the “Brookfield-Grok consortium looking to take private & transform AGL is putting our pens down, with great sadness”.

AGL owns three large coal plants, some gas and renewable assets, and one of Australia’s biggest energy retail business, with more than 4 million customers, according to its 2021 annual report.

Last year, AGL proposed splitting the company into separate publicly traded companies — AGL Australia and Accel Energy — aiming to cut greenhouse gas emissions by as much as 60 percent by 2034. The move would split the company’s retail and coal generation businesses to operate them as two separate divisions. The demerger is progressing well and on track for completion by June this year, the company said last month.

News: Australia's AGL Energy rebuffs sweetened $4 bln bid from Brookfield-led team

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