Mike Cannon-Brookes makes a play for AGL with an eye toward green energy
The billionaire behind tech company Atlassian and part-owner of the South Sydney Rabbitohs has shocked the nation with the news that he would lead a group in bid to acquire AGL energy.
The move occurred in the afternoon of Sunday the 20th of February, with AGL announcing to the world that it had rejected the unsolicited offer, worth approximately $8bn in cash. After initially throwing cold water on the idea, spokesmen for the Energy company have since come out and clarified that the offer was seen as a lowball - offering nearly no premium on the price of shares.
The AGL board determined that: “the Unsolicited Proposal materially undervalues the company on a change of control basis and is not in the best interests of AGL Energy shareholders.”
Cannon-Brookes is already invested significantly in green electricity, his portfolio includes stake in a solar farm project in the Northern Territory, and renewables enterprise Genex. His ambitious plan to buy AGL would supposedly see Australia’s largest energy company achieve a net-zero carbon rating by 2030, just under eight years from now.
What type of energy is in AGL’s future?
But AGL has plans of its own underway as it begins the process of demerging two arms of its business. One branch of the new company named ‘Accel Energy’ would continue to operate the fossil fuel assets owned by AGL. The other branch of the demerger would continue to trade as AGL energy, except now only operating the renewable energy assets of the company.
The move was intended to allay shareholder fears about the polluting nature of AGL’s assets, as part of the wider societal push towards Net-Zero Energy. More cynical commentators argued that the demerger would simply give AGL an opportunity to save face while continuing to run its fossil fuel operations.
Mike Cannon-Brookes argues that the demerger would destroy the value of the company, and that his group’s bid could provide an alternative solution. Doubters have claimed that Cannon-Brookes’ plan will raise the cost of electricity by passing transition costs along to the customer.
Until he can convince the wider public that he has an affordable plan to transition the electrical assets, and maybe sweeten the deal with a richer offering, these plans are likely to remain little more than hot air.
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