Extract from The Guardian
Bid led by Atlassian founder to buy Australia’s biggest polluter and shut its coal plants earlier than planned rejected as not in shareholders’ best interests.
Brookfield and Cannon-Brookes’ Grok Ventures made the extraordinary offer to take over Australia’s most polluting company on Saturday, with a goal to shut its coal power plants earlier than planned.
In a statement to the Australian Stock Exchange, AGL said it had rejected the unsolicited preliminary offer of $7.50 a share, which offered a 4.7% premium on Friday’s closing price of $7.16. Including AGL’s debt, the offer was in the range of $8bn. The company said it was not in the best interest of shareholders.
Speaking on Monday, Cannon-Brookes said the consortium would continue to work on the potential takeover, which would involve Brookfield and Grok Ventures acquiring AGL’s power generation and energy retail divisions, which include coal, gas and renewable energy generation assets.
If successful, the new owners would aim to bring forward AGL’s exit from coal-fired power. It would also halt a planned demerger that would have broken off the company’s fossil fuel assets into a separate entity, to be called Accel Energy.
AGL chairman Peter Botten said the bid did not offer an adequate premium for a change of control of 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.”
Cannon-Brookes said the consortium was confident it could close and replace AGL’s coal plants – Bayswater in New South Wales and Loy Yang A in Victoria – by 2030, and take the company to net zero emissions by 2035. “We have $20bn to fund that transition,” he told the ABC’s RN Breakfast.
He said it should lead to lower bills for consumers, create more jobs and substantially reduce greenhouse gas emissions. AGL is responsible for more than 8% of Australia’s annual emissions – more in its own right than Sweden, Ireland or New Zealand, he said.
The owners of Australia’s coal-fired generators are under increasing pressure, both economic due to the rise of cheap solar energy in the national grid, and from activist shareholders to act in line with the Paris climate agreement.
Earlier this month, AGL brought forward the planned closure date of the Bayswater black coal plant in NSW to no later than 2033, and Loy Yang A in the Latrobe Valley to 2045.
On Thursday, Origin Energy gave notice that the country’s biggest coal-fired power plant, Eraring, could shut seven years earlier than scheduled – in 2025, rather than 2032.
Cannon-Brookes, a renewable energy investor and vocal advocate for greater action on the climate crisis, previously expressed an interest in backing clean energy assets to replace AGL’s ageing Liddell coal plant, which is due to shut next year.
The prospect of AGL’s coal plants closing as soon as 2035 is broadly in line with scenarios published by the Australian Energy Market Operator in a draft integrated system plan – a blueprint for the future – published in December. Under its “step change” scenario, brown-coal plants in Victoria would shut by the early 2030s and the final black coal plants by the early 2040s.
Brookfield last November secured approval from the foreign investment review board for the $17.8bn takeover of transmission group AusNet Services. Given AGL’s role as a major energy generator and retailer – before the planned demerger – the new bid may attract attention from the Australian Competition and Consumer Commission if it were to be agreed.
AGL’s demerger is being advised by Macquarie Bank, while the Brookfield-Grok duo is being advised by Citi.
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