AGL rejects green takeover bid

The board of energy company AGL Energy has rejected a takeover bid aimed at accelerating both the closure of the company’s coal-fired power stations and its investment in renewables.

The company issued a statement to the ASX this morning saying that it rejected an ‘unsolicited, non-binding indication of interest’ from a consortium including tech billionaire Mike Cannon-Brookes.

Canada’s Brookfield Asset Management and Grok Ventures – Cannon-Brookes VC company – bid $7.50 a share, which valued AGL at $8 billion and promised to invest $10 billion in renewable generation.

The bid revealed only on Saturday was 4.7 per cent premium to Friday’s closing price and a 20 per cent premium to the average traded price over the past month.

The bidders plan to accelerate the closure of AGL’s Bayswater Power Station in NSW and Loy Yang A in Victoria’s Latrobe Valley

AGL operates Australia’s largest electricity generation portfolio, with an operated generation capacity of 10,984 MW, accounting for 20 per cent of the total generation capacity of the National Electricity Market.

Last week Origin Energy announced it would close the country’s biggest coal-fired plant at Eraring, NSW in 2025, seven years earlier than previously planned.

However this morning AGL said the bid materially undervalued the company and ‘is not in the interests of AGL shareholders’.

“The AGL Energy board remains committed to progressing the proposed demerger of AGL Energy to establish two separately listed businesses, AGL Energy and Accel Energy, and considers the proposed demerger will deliver better value for AGL shareholders.”

Under AGL’s own proposal Bayswater and and Loy Yang A would be spun out into the new entity Accel Energy, with AGL Energy retaining its other assets.

AGL Energy chairman Peter Botten said both proposed companies would be taking ‘decisive action on decarbonisation’.

It is planned to close Bayswater in the early 2030s, with Loy Yang A following 10 years later.

Any move to close coal-fired stations early has implications for federal politics as well as the National Energy Market.

Cannon-Brookes has already moved on the energy market as a backer of the $20 billion Sun Cable project to deliver renewable power to Singapore via an undersea cable.

Picture: AGL

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