AGL Energy (ASX:AGL) rejects updated Brookfield, Cannon-Brookes bid

• AGL Energy (AGL) rejects a revised bid to buy the firm from a group led by Brookfield Asset Management and Mike Cannon-Brookes’ Grok Ventures for $8.25 per share
• The AGL Energy board says the revised unsolicited proposal remains “well below” both the company’s fair value on a change of control basis and the projected value of the proposed demerger
• AGL Energy Chairman Peter Botten says the proposed demerger to split the company into a bulk power generator and an energy retailer will be a catalyst for the potential realisation of shareholder value
• The new deal was an increase from the original offer of $7.50 per share and was worth about $8.5 billion, including the company’s debt
• Shares are sitting at $7.43 before market open

AGL Energy (AGL) has rejected a revised bid to buy the firm from a group led by Brookfield Asset Management and Mike Cannon-Brookes’ Grok Ventures for $8.25 per share.

The AGL Energy board believes the revised unsolicited proposal remains “well below” both the company’s fair value on a change of control basis and the projected value of the proposed demerger, and is thus not in the best interests of AGL Energy shareholders.

“The Revised Unsolicited Proposal continues to ignore the opportunity that AGL Energy shareholders have through our proposed demerger to realise potential future value,” AGL Energy Chairman Peter Botten 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.”

Mr Botten said the proposed demerger to split the company into a bulk power generator and an energy retailer 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,” he said.

“We have defined distinct dividend policies and capital structures for each company that will support both future growth and appropriate returns to shareholders, as both organisations pursue their commitment to responsibly decarbonise without impacting energy reliability and affordability.”

The revised offer represented a 15.2 per cent premium to the closing price of AGL Energy of $7.16 on February 18 2022. Before the market opens this morning, company shares were sitting at $7.43

The new deal was an increase from the original offer of $7.50 per share and was worth about $8.5 billion, including the company’s debt.

Both Mr Cannon-Brookes and Brookfield, which was to contribute 80 per cent of the proposal, intend to withdraw from subsequent bids, as said by the tech billionaire of social media last night.

The bidders committed to hastening AGL’s withdrawal from coal, closing all three of the company’s coal facilities by 2030 and making Australia’s largest single glasshouse gas emitter carbon neutral by 2035.

The original bold proposal was challenged by Prime Minister Scott Morrison and other members of federal parliament, with Mr Morrison declaring if the takeover was successful, he would veto it.

Shares are sitting at $7.43 before the market opened.