Mike Cannon-Brookes needs more shares for AGL Energy buyout

Mike Cannon-Brookes met with AGL investors last week and there has been market chatter over their disappointment about the lack of detail that the tech billionaire has provided on his future plan for the business.

Mike Cannon-Brookes will likely need to amass more shares in AGL Energy to thwart its demerger plans, leaving some betting that another raid of the stock could be on the cards this week.

But the question is where the funding will come from should he opt to pursue this path.

Mr Cannon-Brookes met with investors last week and there has been market chatter over their disappointment about the lack of detail that the tech billionaire has provided on his future plan for the business.

It leaves some still questioning whether a buyout of the business remains on his agenda after lobbing two proposals earlier this year with Brookfield at $5.4bn and $5.8bn that were both rejected.

Mr Cannon-Brookes, the co-founder of software company Atlassian who operates through his private company Grok Ventures, raided AGL’s share register on May 2, securing an 11.28 per cent stake held through a JPMorgan derivative.

The strategy has been to amass the interest to thwart the company’s plan to demerge its coal business, named Accel Energy, from the remaining AGL Energy business which consists of clean energy assets and will be called AGL Australia.

AGL is targeting net-zero emissions for Accel Energy, which includes its Bayswater and Loy Yang A power stations, by 2047 while Mr Cannon Brookes wants that to happen by 2030.

The shareholder vote takes place before the end of June and for the demerger to go ahead, there needs to be 75 per cent support from those who vote.

Now some think Mr Cannon-Brookes will need to buy up more stock and take his stake to just under 20 per cent to do this. But some financing matters of his own could prove a roadblock.

It could be tricky for the tech billionaire is if he uses his Atlassian shares secured by a margin loan as security for the trade. Atlassian shares have recently fallen sharply in line with an overall decline in tech stocks. Shares are down more than 50 per cent since the start of the year.

AGL Energy has argued that it is not possible to replace all of AGL’s coal generation by 2030.

To do so, Mr Cannon-Brookes would require a vast amount of additional clean energy to be created, which would not make his investment viable from a financial perspective, say analysts.

Others believe that separating the two parts of the business and transferring customers from Accel Energy to AGL Australia over time made the most sense.