AGL’s main shareholder, billionaire businessman Mike Cannon-Brookes, has not ruled out attempting a new takeover bid for the energy giant.
- Mike Cannon-Brookes rejects suggestions he tried to drive down AGL’s share price to facilitate another takeover bid
- He says he wants to rebuild the company and adopt a Paris-aligned plan that would open up more investment
- He says coal dumping will help drive down electricity prices
He also said the company’s transition away from coal-fired power generation must happen faster than expected if the country’s electricity supply is to be more stable and prices are to come down.
On Monday, AGL Energy has abandoned plans to spin off its coal-based generation businessclaiming there was insufficient shareholder support to meet the 75% approval threshold needed for the split to go ahead in June.
The decision came amid continued opposition from major investors, including Cannon-Brookes’ private investment firm Grok Ventures.
Some have speculated that Mr Cannon-Brookes campaigned to have the split blocked so he could return with a takeover bid at a lower price.
Earlier this year, AGL Energy rejected an $8 billion takeover bid from Cannon-Brookes and Canadian asset manager Brookfield to accelerate the shutdown of AGL’s major coal-fired power plants.
Speaking to ABC’s The Business, Mr Cannon-Brookes said his mission was never to lower the price of a potential takeover, but also did not rule out attempting a another chance.
“We are fully focused on splitting up and then renewing and rebuilding the board. [the] company.”
AGL’s share price fell nearly 2% on Monday after the company announced that a split was not on the cards.
Asked if there was any merit to the idea that he drove the share price down, making him a cheaper takeover target, Mr Cannon Brookes replied: “Absolutely none. .”
“As a major shareholder in the company, that would be a pretty stupid thing to do,” he said.
“People said we wouldn’t actually have the equity – we have the equity. [They said] we wouldn’t actually put cash. But we put money.
“We continue to believe that the opportunities for this business are very significant. That’s why we are here.”
He said Grok Ventures had put $650 million on the table as part of its 11.3% stake, making him AGL’s largest shareholder.
“We said we clearly want a plan aligned with Paris, we think that’s the best outcome as a shareholder,” he said.
“We said we wanted a board renewal as a shareholder. And as a major shareholder, we think we have a say in that.”
Call to phase out ‘unreliable’ coal-fired power faster
AGL’s board has pledged to close its Bayswater power station in 2035 and Loy Yang power station in 2045.
Mr Cannon-Brookes said that when those assets stop being profitable for the business, “much faster than those dates of 2035 and 2045, they start losing significant amounts of money”.
“So this transition has to be proactive and has to be managed. It has to be very carefully planned.
“And he has to make sure that we continue to provide electricity at the lowest price to the company’s customers.
“I think we can do it a lot quicker than those dates, that’s for sure.”
Some have warned that if coal-fired power plants are taken out of service too soon, there is a risk of driving up energy prices in the short term.
But Mr Cannon-Brookes said that was unlikely to happen as long as there were alternative sources of supply via renewables.
He said energy costs were currently high because the price of coal and gas was at record highs and old coal-fired power plants were “very unreliable”.
“These are very old assets that are very difficult to manage and manage reliably,” he said.
But according to Australia’s electricity market operator, the country’s energy grid will require at least $10 billion for new transmission lines in the near term to handle output from solar and wind farms.
Mr Cannon-Brookes said: ‘I think we need to be clear that this is an investment.
He said while there would be an upfront cost, Australia could save a lot of money in the long run.
“They will save consumers significant amounts of money, and they are eminently financial over a long period of time,” he said.
“So as an investment, it reduces people’s electricity bills.”
“There is no doubt that a renewable grid, if we were powered by 100% renewable energy by, say, 2030 – which is a largely achievable goal – we would have electricity prices much higher lower for consumers than if we had a fossil fuel-powered grid.”
AGL needs a new plan in line with the Paris agreement
Mr Cannon-Brookes said it was a view AGL shareholders agreed with as 53% of them voted for a Paris-aligned decarbonization plan at the AGL annual general meeting. the company last year.
“Having this will unlock funding and also lower the cost of capital for the business, like ESG [environmental, social and governance] investors will come back to the company as well as banks and other companies that lend money.”
AGL announced on Monday that it would undertake a strategic review and that AGL chief executive Graeme Hunt and chairman Peter Botten would leave the company.
Non-executive directors Jacqueline Hey and Diane-Smith Gander will also step down.
Mr Cannon-Brookes has requested two seats on AGL’s new board but has not guaranteed them.
“The first step is the renewal of the board of directors,” he said.
“The second step is a clearly Paris-aligned plan that meets the scientific objectives because it will unlock funding and reduce the cost of capital, so it has to be done, for sure.”
Job , updated
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