Mike Cannon-Brookes and Brookfield bid to take over AGL rejected

AGL claims the takeover proposal 'materially undervalues' the company.
Written by Aimee Chanthadavong, Contributor
Image: Getty Images

AGL Energy has rejected a takeover bid from tech billionaire and Atlassian co-founder Mike Cannon-Brookes and Canadian asset giant Brookfield.

The Australian energy giant said the proposal, which was received on Saturday, 19 January 2022, "materially undervalues" the company and would not be in the "best interests" of shareholders.

Under the unsolicited proposal, which was put forward by a consortium led by Brookfield and included Grok Ventures, Cannon-Brookes' private investment company, AGL Energy was being offered AU$7.50 per share.

According to AGL, this proposal represented a 4.7% premium on AGL's closing price of AU$7.16 per share on February 18; a 4.2% premium to the volume weighted average price (VWAP) of AU$7.201 per share since AGL's first-year results announced on February 10; and 4.3% premium to the one-month of AU$7.192 per share.

"The proposal does not offer an adequate premium for a change of control and is not in the best interests of AGL Energy shareholders," AGL Energy chairman Peter Botten said.

"Under the unsolicited proposal 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."

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 company said that the proposed demerger is on track to be completed by 30 June 2022.

"The commitments set a new baseline for both organisations against which they will measure their success and strive to improve as the energy market evolves. Under these commitments, AGL Australia would achieve 50% reduction in emissions by 2030 and Accel Energy would achieve a 55-60% reduction in emissions by no later than 2034, with the potential to bring this forward should the system be ready," Botten said.

If the takeover did go ahead, the new owners were expected to accelerate AGL's plans to shift into the renewable energy market.

The takeover bid by Cannon-Brookes comes as the tech billionaire continues to take a vested interest in green energy projects, having previously told Time that Australia could become a renewable energy superpower.

Under Grok Ventures, Cannon-Brookes has provided financial backing to other renewable energy companies, such as Sun Cable, which plans to develop a solar energy power farm in the Northern Territory to power Darwin and Singapore via a subsea cable. 

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