Intrigue as Brookfield acquires stake in AGL after failed takeover bid
Canadian asset manager Brookfield has snapped up a 2.5 per cent stake in power giant AGL, fuelling speculation it may seek to revive a push to take over the company.
AGL, the largest Australian electricity generator, informed investors on Thursday it had become aware that a subsidiary of Brookfield had bought 17.2 million shares late last week.
“It is possible that subsequent trading may have altered the position,” AGL said.
“AGL has not received any updated acquisition proposal from Brookfield, since the two proposals received earlier this year that were announced to the market. AGL is continuing to focus on the previously announced review of AGL’s strategic direction.”
Brookfield declined to comment.
The acquisition comes after Brookfield, in partnership with Australian tech billionaire Mike Cannon-Brookes’ investment vehicle Grok Ventures, lobbed two takeover offers for AGL earlier this year, which valued the company at more than $8 billion and came with a promise to invest a further $10 billion to $10 billion to build enough large-scale renewables and batteries to bring forward the closures of AGL’s fleet of coal-fired power stations in Victoria and NSW.
The board rejected the offers, arguing the bidding consortium was undervaluing the business and vowing to press ahead with long-held plans to demerge AGL’s coal-fired power stations from its retailing and clean energy businesses.
The consortium put its “pens down” in March and walked away from the takeover campaign. Brookfield and Grok are no longer in talks about making an offer.
However, Cannon-Brookes eventually re-emerged and amassed an 11.3 per cent interest in AGL. The Atlassian co-founder then launched a successful campaign to convince other shareholders to block the board’s proposed demerger, arguing that splitting AGL into smaller entities would leave it less able to fund the investments needed to bring forward the closures of its coal-fired power stations that are not currently due to retire until 2045. He also insisted AGL would have a better future if it remained a single company that could use its giant retail base of 4.5 million customers to harness clean-energy technology.
The board last month bowed to intensifying shareholder pressure and abandoned its plans to demerge its power generation businesses following months of pressure from Cannon-Brookes. It also announced the resignations of chief executive Graeme Hunt and chairman Peter Botten as well as independent directors Diane Smith-Gander and Jacqueline Hey, with remaining board directors set to conduct a strategic review into the future of the 180-year-old company.
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