A $5 billion consortium bid for AGL Energy, led by Atlassian billionaire Mike Cannon-Brookes through his private venture capital firm Grok Venture, has been rejected by ASX-listed energy company as undervaluing the business.
Cannon-Brookes, who last year committed to investing $1 billion through Grok on climate change startups over the next decade, teamed up with Canadian infrastructure investment firm Brookfield for the takeover offer at $7.50 a share, having close on Friday at $7.16.
AGL shares jumped 10.6% to close on Monday at $7.92, at one stage climbing above $8.
Over the past 12 months AGL’s share price has ranged between$10.67 and a low of $5.10 in November 2021.
The takeover bid valued the business at around A$5 billion, and Monday’s jump added around $500 million to AGL’s market capitalisation.
Cannon-Brookes said he’ll continue talks with the company despite the rebuff.
AGL’s board met on Saturday and rejected the offer saying it “materially undervalues the company on a change of control basis and is not in the best interests of AGL Energy shareholders”.
The offer was a 4.7% premium on Friday’s closing price and a 4.3% premium on the one-month VWAP of $7.192
The deal offered AGL shareholders cash with an option for scrip in the Brookfield consortium acquisition company.
AGL Energy chairman Peter Botten said shareholders would forgo potential future value from the company’s proposed demerger.
“The proposal does not offer an adequate premium for a change of control and is not in the best interests of AGL Energy shareholders,” he said.
Cannon-Brookes argues a faster shutdown of coal-fired power stations would reduce electricity prices and that the demerger is not good value for shareholders.
The Atlassian billionaire, who has invested heavily in renewable energy projects and startups in recent years, told ABC Sydney that the AGL demerger plan was “not sensible” and “incredibly high risk for shareholders”.
“We’re bringing up $20 billion in capital to fund the transition and to do that safely. The company does not have the capital to fund that transition and as a public company, it can’t do it as fast as we could do it as a private company,” he said.
Swinburne University engineering Professor Geoffrey Brooks said that while people accustomed to seeing the public theatre of Green activists protesting against coal-fired power stations, it’s a dramatic shift to see a billionaire activist taking over a large power company to accelerate their closure.
” Mike Cannon-Brookes, Australia’s third richest person, has made his money from IT but he clearly has a passion for renewable energy,” he said.
“His initial bid for ownership of AGL has been rejected by the Board of AGL but clearly this new twist to the interplay between Green activism and the corporate world has some way to go. This bid raises many interesting issues about corporate governance and how Australia will manage this transition from a coal dominated power system to renewable energy.”
Cannon-Brookes has invested in the Sun Cable’s giant $30 billion solar farm in the Northern Territory, alongside mining billionaire Andrew Forrest, as well as solar cell startup SunDrive and home solar finance company Brighte.