A consortium led by Brookfield Asset Management and Mike Cannon-Brookes’ Grok Ventures is stepping away from attempts to take over AGL (ASX: AGL) after the energy company’s board shut down a second proposal.
The rejected second bid would have seen the consortium acquire AGL for $8.25 per share, valuing the target at more than $5 billion, and is 10 per cent higher than what the suitors initially proposed in late-February.
The latest bid also represents a 15.2 per cent premium to the closing price of AGL of $7.16 on 18 February, and, as noted by the Atlassian co-founder and tech billionaire Cannon-Brookes, is around 46 per cent more than the price of $5.55 in December last year.
As such,he said in a Twitter thread the suitors were “putting our pens down - with great sadness”, stepping away from what would have been a major transformation of AGL.
“Our path was the world’s biggest decarbonisation project,” Cannon-Brookes said.
“The board are proceeding with their demerger path. This path is a terrible outcome for shareholders, taxpayers, customers, Australia and the planet we all share.
“Thank you everyone who supported what we were aspiring to here.”
AGL has confirmed it is going to proceed with the planned demerger of the company to establish two separately listed businesses - AGL Australia and Accel Energy.
The move to demerge was proposed on 31 March 2021 and would see Accel establish coal closure dates to no later than 2033 for Bayswater Power Station and 2045 for Loy Yang A Power Station. It would also aim for net-zero emissions by 2047.
The closures would follow the shutdown of Australia's largest coal-fired power station - Eraring Power Station - which Origin Energy (ASX: ORG) announced earlier this year would cease operating by August 2025.
“The revised unsolicited proposal continues to ignore the opportunity that AGL Energy shareholders have through our proposed demerger to realise potential future value,” AGL chairman Peter Botton said.
“It also ignores the momentum we have recently seen in the business through our solid half year result, strong progress on the demerger, strong interest in our Energy Transition Investment Partnership and the improvements we are seeing in forward wholesale prices.
“The proposed demerger will be a catalyst for the potential realisation of shareholder value. It will create two industry leading companies with distinct value propositions. It will allow each business to be valued separately and more positively by the market on the basis of their own specific business fundamentals.”
AGL also said the latest bid from the Brookfield-Grok consortium was materially the same as the one rejected in February, except that it also included a requirement that AGL effectively commit now to recommend the Revised Unsolicited Proposal.
“In the absence of a proposal which reflects an appropriate fair value of the company on a change of control basis, the board continues to pursue and intends to recommend shareholders approve the previously announced demerger and believe this to be the value maximising strategy for AGL Energy shareholders,” AGL said.
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