AGL rejects Mike Cannon-Brookes, Brookfield takeover offer

“We think our bid obviously has significant value for shareholders and is a far better option than the alternate path, which is the demerger that’s on the table from the point of view of risk and the point of view of shareholder value.”

Loading

If successful, their move would halt AGL’s plans to demerge its business into two separately listed entities. Under the demerger plan, AGL Australia would own the company’s power, gas and telecommunications retailing business along with some cleaner generation assets, while Accel Energy would hold its fleet of large coal and gas-fired power generators across the country.

In the face of mounting investor pressure to act on climate change, AGL said earlier this month it would bring forward the closure of its Bayswater plant in New South Wales by two years, from 2035 to no later than 2033, while Victoria’s Loy Yang A plant would retire by 2045 instead of 2048.

That announcement disappointed climate advocates, who have been ramping up demands for AGL to exit coal much earlier. The United Nations has called for developed countries to remove coal from their power networks by 2030 in order to avert catastrophic levels of climate change.

If the Brookfield and Mr Cannon-Brookes’ takeover bid succeeds, the prospect of getting AGL out of coal by 2030 would continue the trend of private companies bringing forward the retirements of aging coal-fired power plants despite the federal Coalition government’s insistence that the fossil fuel is crucial to ensure ongoing reliable and cheap electricity.

Federal Energy Minister Angus Taylor last week condemned a decision by rival power supplier Origin Energy’s decision to close the Eraring black coal-fired power station in NSW up to seven years early as “bitterly disappointing” and warned it would leave a “considerable gap” in reliable electricity generation.

While reducing coal’s power output would significantly cut emissions, AGL and Mr Taylor have voiced concerns that shutting coal-fired generators too soon without enough reliable power to support weather-dependent wind and solar energy could risk causing a “messy” energy transition threatening power supply and prices.

Mr Cannon-Brookes said the consortium would have between $ 10 billion to $ 20 billion to invest in ensuring a smooth transition, including building more renewable assets.

“This is a significant investment in Australia and in that decarbonisation effort, and will result in both a cleaner grid, but also a more stable and a cheaper grid.”

Mr Cannon-Brookes said the consortium would “sharpen” its exact dates for coal’s exit over time, but he was “fairly confident” the consortium could retire AGL’s coal assets by 2030 in line with the Paris Climate Agreement.

“We are fairly confident we can retire our coal capacity by 2030 in line with the Paris Agreement, economically, sensibly and prudently,” he said.

“There’s no logical reason, no economic reason we should not have the cheapest power in the world and that is what we’m intending to go after. ”

The Market Recap newsletter is a wrap of the day’s trading. Get it eye weekday afternoon.

Leave a Comment