Brookfield’s AGL Energy 2.56pc stake purchase sparks takeover talk

AGL Energy suitor Brookfield has emerged with a small stake in the power giant – with the move rekindling speculation it may be back for a fresh tilt at the company.

AGL Energy’s suitor Brookfield Asset Management has emerged with a small stake in the power giant – with the move rekindling speculation it may be back for a fresh tilt at the company.

Brookfield owns 17.2 million shares, or a 2.56 per cent stake in the company, according to AGL, the latest twist after a hugely volatile financial year that saw its demerger dumped following a high-profile campaign from its largest shareholder, Mike Cannon-Brookes’ Grok Ventures.

“AGL became aware of this information through routine registry analysis responses, and therefore the information is historical. It is possible that subsequent trading may have altered the position,” the company said in an ASX statement on Thursday.

“AGL has not received any updated acquisition proposal from Brookfield, since the two proposals received earlier this year that were announced to the market. AGL is continuing to focus on the previously announced review of AGL’s strategic direction.”

Van Eck, one of the company’s largest shareholders, said the reprisal of a low-ball bid was the last thing AGL needed given its ongoing strategic review, the change of federal government and the fast-moving national energy crisis.

“I don’t want to see another takeover offer at these distressed levels when a strategic review is on,” Van Eck’s deputy head of investments, Jamie Hannah, said.

Brookfield bought the stake through a company called Australian 123456789 4 Pty Ltd, which was registered with the corporate regulator on April 28. The company’s directors include Stewart Upson, who fronted the Canadian company’s bid for AGL, and Leonard Chersky, a managing partner in its private equity group.

Brookfield’s Mark Carney. Picture: AFP

Brookfield and Grok – which both declined to comment – previously teamed up as a consortium but saw takeover offers rejected in February and March.

They had planned to sink $20bn in transitioning AGL’s power generation fleet and targeting net-zero emissions by 2035 with Brookfield funding 80 per cent of the takeover offer and Mr Cannon-Brookes the 20 per cent balance.

Both then quit the race, with Brookfield subsequently saying it was not in “active discussions” on a buyout and Mr Cannon-Brookes saying the duo were “putting our pens down with great sadness”.

The consortium’s last bid was $8.25 a share, a 75c fillip on its original offer, but both were shunned by chairman Peter Botten for undervaluing the company. AGL shares fell 14c, or 1.7 per cent, to $8.25 on Thursday.

After the takeover failed, Mr Cannon-Brookes built a 11.3 per cent stake in AGL that he used to engineer the demise of its planned demerger, which would have taken effect today.

AGL chief executive Graeme Hunt said in May that the Atlassian co-founder may be plotting a third takeover attempt, saying shareholders were confused over the tech titan’s intentions.

Brookfield’s Mark Carney has said it would look elsewhere if AGL did not value its buyout tilt and was considering 50 transactions around the world in a wide range of industries. Still, rumours have continued to swirl that the Canadian investment giant remained in the hunt for AGL.

AGL is now working to finetune the focus of its new strategy including a reassessment of its ­decarbonisation plans and which existing demerger strategies may be halted.

The retailer dumped its planned split into retail and generation units on May 30 amid calls from Mr Cannon-Brookes for a swifter exit from coal and Paris-aligned climate goals.

AGL directors Vanessa Sullivan and Graham Cockroft were handed oversight of a strategic review of the company and have now been joined by fellow board member Mark Bloom to reboot the company’s strategy.

AGL said the review would focus on four key areas including a review of the existing plans it had developed for AGL Australia, with its 4.5 million customer base, to be split into a newly listed retail-­focused company and the coal generator Accel Energy.

Australia’s largest polluter will also reassess its decarbonisation strategy and analyse the scale and mix of energy supplies needed to meet carbon reduction goals. An assessment of AGL’s capital structure and financiers will also be part of the review.

An update will be provided at its annual results in August, with the initial outcomes of the review to be presented to investors in ­September.

Mr Cannon-Brookes had initially pushed for two board roles but subsequently said one director position would suffice amid opposition from some shareholders.