Atlassian co-founder Mike Cannon-Brookes has wasted no time in becoming an activist shareholder after taking an 11.3% stake in energy giant AGL.
The billionaire launched a campaign with the slogan “Keep it together” to oppose AGL’s plans for a demerger, creating two separate ASX-listed companies, just hours after news emerged that he’d become AGL’s largest shareholder through his family investment firm, Grok Ventures.
The campaign includes a website and slick video with Cannon-Brookes appealing to AGL shareholders to vote against the demerger at a meeting scheduled for June 15. The plan has to be approved by a minimum of 75% of AGL shareholders.
In the video Cannon-Brookes claims the demerger “will threaten AGL’s renewable energy transition”.
We will be voting against the upcoming, flawed demerger.
— Mike Cannon-Brookes 👨🏼💻🧢🇦🇺 (@mcannonbrookes) May 2, 2022
“We believe the Board’s plan to split AGL into two companies would deliver a terrible outcome for shareholders, customers, Australian taxpayers and the planet,” the Keep It Together site says.
“Decarbonisation is one of Australia’s biggest economic opportunities and a vital challenge the world needs to solve. This is why we are now AGL’s largest shareholder. We’re calling on fellow shareholders to vote AGAINST the demerger, and for the people of Australia to support a brighter future.”
Several people in the tech sector are backing the move by Grok with Geek Girl Academy co-founder Sarah Moran saying she’ll be buying AGL shares too.
In an open letter to the board of directors, Cannon-Brookes calls the merger “a flawed plan” saying Grok intends to vote against it.
The proposed demerger “risks a terrible outcome” for three key reasons, he says, with the split into two companies, AGL Australia, an energy retailer, and Accel Energy, an electricity generator, creating “two weaker, interdependent entities that are more costly to run”, he believes will be worth less than the current business.
Accel Energy is at significant risk of becoming a stranded asset given its meaningful coal exposure,” Cannon-Brookes writes.
“Accel Energy will have substantial liabilities that impact its credit worthiness and impede its ability to raise the capital required to fund the replacement of its coal-fired power generation fleet and meet its remediation liabilities.”
His entry into the battle over AGL’s demerger comes just two months after the board rejected his second $5.5 billion takeover bid with Brookfield Asset Management at $8.25 a share. Brookfield is not part of this play.
Several weeks on, he’s been forced to buy in at a premium with AGL shares currently sitting at $8.62 on Monday’s close. He’s bought in via derivatives through JPMorgan, taking 8.44% at today closing price, plus another 2.84% in a cash-settled equity swap from April 4 at $8.46.
Picking this fight with the AGL board is at a buy-in worth around $650 million.
AGL’s share price has now climbed around 37% this year, to levels just below 12 months ago, but longer-term investors have seen the price fall 69% over sit reaching an all-time high five years ago.