- AGL has rejected a revised takeover bid from Mike Cannon-Brookes and Brookfield
- The $8.25 a share bid was a ten% improve on their first bid two weeks in the past and value $5.5 billion
- Cannon-Brookes mentioned their consortium gained’t make an additional bid
- AGL is planning a demerger that it says will supply higher worth
Atlassian billionaire Mike Cannon-Brookes is strolling away from plans to accumulate Australia’s largest power provider, AGL, after the ASX-listed firm rejected a second $5.5 billion takeover bid for the enterprise.
Cannon-Brookes and his Canadian takeover accomplice, Brookfield Asset Administration, upped their bid by 10% to $8.25 a share on Friday afternoon, valuing the enterprise at $5.5 billion. The deal would have additionally taken on $3 billion in debt, alongside a promise to take a position $20 billion to transition the enterprise to renewable power.
The Atlassian co-founder reported had a 20% stake within the venture by means of his household VC agency, Grok Ventures. They deliberate to take the corporate non-public and speed up the closure of AGL’s coal-fired energy stations.
AGL (ASX:AGL) shares sat beneath the unique takeover supply of $7.50 made and rejected by the board a fortnight in the past, sitting at $7.43 at Friday’s market shut.
As Cannon-Brookes mentioned, asserting on Twitter that the takeover plan is now lifeless, the supply was 46% greater than AGL’s share worth 90 days in the past.
The Brookfield-Grok consortium trying to take non-public & rework AGL is placing our pens down – with nice unhappiness.
This weekend, the board rejected our raised supply of $8.25. 46% greater than the value of $5.55 about 90 days in the past 🧵 (1/3) pic.twitter.com/c5KYwGozDo
— Mike Cannon-Brookes 👨🏼💻🧢🇦🇺 (@mcannonbrookes) March 6, 2022
“Our path was the world’s greatest decarbonisation venture. From Aus. The board are continuing with their demerger path,” he wrote.
“This path is a horrible consequence for shareholders, taxpayers, clients, Australia and the planet all of us share.”
A fortnight in the past, when the primary takeover supply was made, AGL shares sat at $7.16 following the corporate’s 1H FY22 outcomes introduced on February 10. The most recent supply represented a 15.2% premium on that worth.
This morning AGL Vitality chairman Peter Botten mentioned the bid ignored “potential future worth” for shareholders from a proposed demerger that may cut up the corporate in two, with one facet centered on legacy energy era and the opposite half on renewable power.
“It additionally ignores the momentum we’ve got just lately seen within the enterprise by means of our strong half yr consequence, robust progress on the demerger, robust curiosity in our Vitality Transition Funding Partnership and the enhancements we’re seeing in ahead wholesale costs,” Botten mentioned.
“The proposed demerger shall be a catalyst for the potential realisation of shareholder worth. It is going to create two business main firms with distinct worth propositions.”
AGL’s share worth has greater than halved in simply 18 months and has fallen greater than 22% within the final yr.
AGL’s share worth over the past 12 months
Cannon-Brookes, who final yr dedicated to investing $1 billion by means of Grok on local weather change startups over the subsequent decade, has argued {that a} sooner shutdown of coal-fired energy stations would scale back electrical energy costs and that the demerger is “extremely excessive threat for shareholders” and never good worth for them.
Dan Gocher, Director of Local weather & Atmosphere on the Australasian Centre for Company Duty (ACCR) mentioned AGL’s board lacked “pores and skin within the sport” when it got here to personally investing within the firm.
Gocher mentioned that based on firm data, placing other than greater than 300,000 shares CEO Graham Hunt obtained as an incentive reward, he final purchased shares within the firm in 2018 at $19.66. Chair Peter Botten final bought AGL shares in September 2020 at $14.84.
“If the AGL administrators imagine the corporate is price $9 or $10 a share, why on earth haven’t they been shopping for the inventory, when it’s buying and selling round $7.40?,” Gocher mentioned.
“CEO Graeme Hunt has claimed that the Brookfield consortium ought to be providing a 30% premium to the present share worth.
“If Hunt genuinely believes the corporate is price that a lot, why has he not spent his personal cash on AGL shares since September 2018, regardless of receiving tens of millions in remuneration since?”
Gocher mentioned the board “has overseen a catastrophic decline within the share worth of greater than 70%” since their peak in 2017.
“The present administrators have basically mismanaged the power transition, but are asking shareholders to ‘belief them’ on the demerger. Shareholders ought to rightly be skeptical,” he mentioned.
“The dearth of ‘pores and skin within the sport’ from AGL administrators means that institutional buyers and retail shareholders are bearing the price of the board’s poor resolution making.”
