Brookfield says pressure now on AGL following rejected $8.1bn bid

Mark Carney says the AGL will be accountable to shareholders after rejecting ‘exactly the kind of transformation’ Brookfield is ready to do.

Mark Carney is a Vice Chair of Brookfield Asset Management and Head of Transition Investing. Picture: Daniel Leal-Olivas/ AFP.

Canadian investment giant Brookfield said the pressure is now on AGL Energy to demonstrate the value it can unlock through its demerger after the power giant rejected its $8.1bn bid and hinted it may now look elsewhere for alternate deals.

“We’ve made what we believe is a very strong cash proposal for shareholders and for AGL’s customers, and really for all Australians. But look the decision rests with AGL and they’ll be accountable to their shareholders and stakeholders to demonstrate that the plan that they’re choosing with their demerger is more valuable in all senses than ours,” said Mark Carney, a Brookfield executive and former Bank of England governor.

Brookfield would look elsewhere if AGL didn’t value its buyout tilt and said it was considering 50 transactions around the world in a wide range of industries.

“AGL is exactly the kind of transformation we’re ready to do. There are many similar businesses around the world that are interested in our capital and our capabilities to help them to transition. So if it’s not AGL, then we’ll look elsewhere and continue to do so at this point. As you know, we’re not in active discussions with the company,” Mr Carney told a conference in Sydney.

AGL rejected a $8.25 bid from the Brookfield and Mike Cannon-Brookes consortium, the second offer rebuffed from the investment duo.

“This was exactly the type of transformation that we’re very well suited for,” said Mr Carney, Brookfield Asset Management’s vice chair and head of transition investing.

“Not just because of capital, lots of people have capital. But Brookfield is one of the largest private renewable operators in the world. Over 21 gigawatts of clean power around the world, and a pipeline of another 60-plus gigawatts. So that capability brings lots of opportunities, whether it’s in Australia, or around the world and we will be doing transactions around the world. In fact, we’re already putting substantial capital to work.”

Brookfield was funding 80 per cent of the takeover offer with Mr Cannon-Brookes the 20 per cent balance.

Meanwhile, Mr Carney also warned climate laggards who fail to transition quickly enough to green energy and net zero emissions goals will destroy value in their companies.

“The reality of the horrors in the Ukraine and the knock on effects is there’s going to be more emissions as a consequence of that because of the short term adjustment in energy markets. So it’s a priority. And the companies that move and those who help them are going to be competitive in that world and those who don’t, are not,” Mr Carney said.

“The companies that move and those who help them are going to create value and those who move too slowly are going to destroy value. We’re putting money to work around the world and we’re very dedicated working with Mike Cannon-Brookes in this specific situation.”

“There are many similar businesses interested in our capital capabilities to help with this transition and we’re gonna put it to work elsewhere. We’d love to do more in Australia but we recognise where decisions rest and in this case it rests with the AGL board.”

AGL shares closed up 0.7 per cent on Wednesday at $7.33.