By Nick Toscano
Tech billionaire Mike Cannon-Brookes and international asset manager Brookfield are set to walk away from their proposal to buy AGL and fast-track the closure of its coal-fired power plants after the energy giant’s board rejected a sweetened bid worth nearly $9 billion.
The nation’s biggest power supplier received an increased offer from the bidding consortium over the weekend, worth $8.25 per share. AGL shares closed at $7.43 on Friday. But AGL’s board, which has held an emergency meeting to discuss the latest offer, is expected to formally reject the offer on Monday morning. Sources close to Brookfield indicated that the latest bid may be the consortium’s final offer.
Mike Cannon-Brookes and Brookfield have launched a bid for AGL to “accelerate its coal exit”.Credit: Wolter Peeters, Bloomberg
Mr Cannon-Brookes, the co-founder of software developer Atlassian and Australia’s third-richest person, on Sunday said it was with great sadness that the consortium was “putting our pens down”.
“This weekend, the board rejected our raised offer of $8.25 - 46 per cent more than the price of $5.55 about 90 days ago,” he said in a post on Twitter.
Mr Cannon-Brookes said the consortium’s proposal to spend between $10 billion and $20 billion in large-scale renewable energy and batteries to enable the early closures of AGL’s power stations that account for 8 per cent of Australia’s overall greenhouse gas emissions would have been the “world’s biggest decarbonisation project”.
But instead, the board was proceeding with its controversial plan to demerge its massive coal- and gas-fired power stations into a separate entity known as Accel Energy and continue burning coal until the mid-2040s, he said.
“This path is a terrible outcome for shareholders, taxpayers, customers, Australia and the planet we all share,” Mr Cannon-Brookes said.
AGL last month knocked back Mr Cannon-Brookes and Brookfield’s initial $8 billion takeover proposal for the company, telling investors it believed the offer “materially undervalues” the business and would not be in their best interests to approve.
The consortium’s initial cash offer, of $7.50 a share, had represented a 4.7 per cent premium on the company’s closing price before the bid was announced.
Justifying the board’s rejection of the initial offer, AGL chief executive Graeme Hunt last month insisted a 4.7 per cent premium was far too low, given takeover premiums often exceeded 30 per cent.
“If you’re going to try to take control of a company ... then you need to go into it the way it would normally happen in the corporate world, and you pay a ‘control premium’ which typically is 30, 40, 50 per cent, depending on the circumstances, over and above what the company trades at,” Mr Hunt said.
AGL and the federal government have also argued the nation’s coal-dominated power grid was not ready to handle the bidding consortium’s proposal to close its coal-burning power stations and shift to more weather-dependent renewable energy without imperilling power supply and bills.
Mr Cannon-Brookes said the consortium’s proposal was credible, well-funded and would avoid any disruption to consumers.
“This is not crazy futuristic technology, this is taking the technologies we have today and deploying them very pragmatically and sensibly at scale to bring that transition here as quickly as we can to bring down prices for power customers, industrial manufacturing all the way down to residential,” Mr Cannon-Brookes told The Age and the Herald last month.
“It makes total logical and economic sense.”
AGL is Australia’s heaviest source of greenhouses gases, accounting for about 8 per cent of national emissions. Under its current timelines, AGL does not intend to close its final coal-burning power station until 2045, despite the United Nations escalating pressure for developed countries to phase out the planet-heating fossil fuel from the power mix by 2030 in order to avert catastrophic levels of global warming.
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