Grok Ventures against AGL takeovers for now as it plans quick review
Mike Cannon-Brookes’ Grok Ventures says it is against any immediate takeovers of AGL Energy as it plans to prioritise two other major tasks first.
Mike Cannon-Brookes’ Grok Ventures said it was against any immediate takeover proposals being considered for AGL Energy, saying it wants to prioritise board renewal and a fast review of the company’s strategy.
Grok, AGL’s largest shareholder, defeated the company’s demerger scheme resulting in half its board being dumped.
Questions are now being asked over its intentions for the company and whether Grok may look to reprise its takeover interest, following two bids being rejected earlier this year, or whether another suitor could launch an offer.
However, Grok’s chief executive Jeremy Kwong-Law told the Credit Suisse Australia Forum on Wednesday that a plan needed to be put in place first.
Mr Cannon-Brookes’ high-profile campaign left AGL’s board in tatters and forced it to embark on a fresh strategy after working on the demerger plan for the last year. But Mr Kwong-Law said AGL would recover from the battle with its largest investor. “I challenge the idea the company is in total disarray,” he said.
The company had already been in a really difficult position in the last 12-18 months,” Mr Kwong-Law told the conference.
“That was because they didn’t have a strategy for what the company was about, so that destabilising component had been more or less done.”
“When we came in and had a number of different engagements, we saw that more and more.
“I think the obligation of the board is to do the best thing for the company. I think shareholders have clearly said we want a plan that is an integrated AGL business. And let’s get that plan in place before we go and think about anything else,” Mr Kwong-Law said.
With rumours that Shell, Iberdrola or a similar large energy player may be interested in bidding for AGL’s retail arm, Grok said the focus needed to be on re-setting the company first.
“You need to have a comparison first. So whatever the dollar amount is – what is the alternative version that it could be?” Mr Kwong-Law said. “Otherwise you can’t value what you have on the table because you don’t know if it’s good value or not good value.”
“Until you have that kind of position of what a standalone business looks like in the future, you can’t really rate it. Is $10 good? You need to have that view as a new board before you can go down that path.”
Grok was due to meet on Wednesday with AGL board directors, Vanessa Sullivan and Graham Cockroft, who are overseeing AGL’s strategic review in the wake of the failed demerger.
With AGL now looking to appoint a new CEO and chairman as Graeme Hunt and Peter Botten head for the exit, Mr Kwong-Law said it was critical to find the right people that can accelerate Australia’s biggest electricity generator into a clean-focused energy company, harnessing the combined power of households’ rooftop solar and batteries.
“It’s good to see that for four of the directors it wasn’t for them because they didn’t believe in it. So we need to find an independent chair that’s really, really strong. We need some people who understand how to build renewables in the business to help the company that hasn’t built any renewables in the last five years,” he said.
“You need someone who understands behind the metre opportunity that sits in front of AGL with 2.5m household and lots of small businesses and industrial customers … (and) also ideally after someone who can also provide that insight of how do you go from a fossil business into renewables.”
Grok has issued elements of a plan for AGL including for coal to be phased out by 2035 and green loans made to customers to switch households to 100 per cent renewable electricity. The power giant had planned to split off AGL Australia, with its 4.5 million customer base, into a newly listed retail-focused company with the current AGL to be rebadged as a coal-dominated generator called Accel Energy.
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