Update — May 30, 2022: AGL Energy has given in to the bids its new biggest shareholder, billionaire Mike Cannon-Brookes. The energy giant has abandoned its demerger plan to split into separate generator and retailer arms.
AGL said in a statement on Monday morning it was withdrawing the plan after it failed to get enough votes required and its Chair Peter Botten, CEO Graeme Hunt and other board members would resign. This is a big shakeup for Australia’s biggest energy provider and the worst carbon emitter of the sector.
The Aussie software billionaire and Atlassian co-founder had been planning this move for a while. He launched a takeover bid of the company that was blocked back in February and then, through outside negotiations with other shareholders, managed to secure an 11 per cent stake in early May — making him the company’s biggest shareholder.
Mike Cannon-Brookes said the demerger would delay the closure of AGL’s remaining coal-fired power plants and vowed to block it when he had a big enough stake to cast the biggest vote.
— Michael Mazengarb (@MichaelM_ACT) May 29, 2022
The AGL board will be renewed following four resignations and Cannon-Brookes is reportedly gunning for two seats to push his climate action agenda forward.
AGL’s demerger is off. Board renewal is underway:
Chair Peter Botten will resign.
CEO Graeme Hunt will step down.
Jacqueline Hey has resigned as non-exec director, effective immed.
Diane Smith-Gander will resign after the co’s FY results, in August.@mcannonbrookes
— Sabra Lane (@SabraLane) May 29, 2022
So maybe billionaires aren’t all evil and maybe some of them do have the soul to do something with their excess wealth? Maybe? Let’s see what happens next.
Update — May 3, 2022
Aussie software billionaire and Atlassian co-founder Mike Cannon-Brookes has become AGL Energy’s largest shareholder after he bought more than 11 per cent of the company this week.
Per the ABC, a letter was sent to the power company’s board of directors on Monday night confirming that his private investment group Grok Ventures now holds an 11.28 per cent share in the company. It comes after his takeover bid was blocked in February.
Cannon-Brookes said he’ll use his major stakeholder power to vote against AGL’s planned demerger next month. The demerger would split the company into two separate operations with one focused entirely on the company’s coal-fired power stations (aka fossil fuel farms.)
Original – February 21, 2022
Australia’s largest power company and biggest polluter AGL Energy has rejected a takeover bid that would’ve seen the company reach net zero by 2030.
Australian software billionaire and Atlassian co-founder Mike Cannon-Brookes and Canadian asset management giant Brookfield lodged an unsolicited bid on Saturday to buy the company for $7.50 per share, or around $8 billion.
It was a pretty generous offer as it was 4.7 per cent higher than the company’s shareholder price on Friday, but it came with a condition: AGL would have to reach a target of net-zero target emissions by 2035. This would’ve meant bringing forward its scheduled end to coal and the close of one of its largest coal-fired power stations 15 years early in 2030.
The new owners would’ve also halted a planned demerger that would have separated the company’s fossil fuel assets into a new company to be called Accel Energy.
On Monday AGL rejected the preliminary offer and said it was not in the best interest of shareholders, so coal is here to stay a while longer.
AGL chair Peter Botten said in a statement the proposal did not offer shareholders a premium for such a major change to the company.
“Under the unsolicited proposal, the board believes AGL Energy shareholders would be forgoing the opportunity to realise potential future value via AGL Energy’s proposed demerger, as both proposed organisations pursue decisive action on decarbonisation,” Botten said.
But Cannon-Brookes said on Monday he would continue to work on the potential takeover.
Speaking on ABC’s RN Breakfast he said AGL was responsible for more than eight per cent of Australia’s annual carbon emissions — which is also more than Sweden, Ireland or New Zealand emit overall in a year — and it would take big moves like his to see major companies change and therefore limit the effects of climate change.
“On a global scale this is a massive decarbonisation effort,” Cannon-Brookes said.
“The economics stacks up, the science stacks up. What we require is just the gumption to go it and actually make it happen, and that’s what we’re trying to do.”
Prime Minister Scott Morrison was questioned by journalists about Cannon-Brookes’ bid on Monday and said the government did not want any coal plants to close early.
“We need to ensure that our coal-fired generation of electricity runs to its life, because if it doesn’t, electricity prices go up,” Morrison said.
But the market has long been shifting to renewables so we know this isn’t true and we’d be better off in the long run scrapping coal ASAP.
Cannon-Brookes and Brookfield managing partner Stewart Upson have both said the takeover would lead to lower power bills for consumers and create more jobs while tackling climate change.
“To have a material impact on net zero transition, investors need to do more than simply avoid carbon-intensive businesses and we need to be willing to tackle emissions head on,” Upson said.
AGL has already responded to pressure around reducing coal-fired power this month and announced it would close the and Loy Yang A in Victoria’s Latrobe Valley in 2045, ahead of 2048 as previously planned. Loy Yang A produces about a third of the state’s electricity.
But its commitment was a bit wishy-washy because the company said the closure would depend on “the readiness of the entire energy system to operate without our critical baseload generation”.
At this rate it seems coal is here to stay for at least the rest of this decade.