Australia’s AGL Rejects $3.6 Billion Takeover Bid From Brookfield, Billionaire Mike Cannon-Brookes

AGL Energy has rejected the A$5 billion ($3.6 billion) takeover bid jointly made by Canada’s Brookfield Asset Management and Grok Ventures—the investment vehicle of Australian tech billionaire Mike Cannon-Brookes—over the weekend, saying the offer was too low.

Under the proposal sent to AGL Energy—Australia’s biggest power producer—on Saturday morning, Brookfield and Grok Ventures offered to buy 100% of AGL for A$7.50 a share, which was a 4.7% premium to the stock’s closing price of A$7.16 on Friday on the Australian bourse. The stock jumped as much as 13% to an intraday high of A$8.09 in Sydney trading on Monday.

“The proposal does not offer an adequate premium for a change of control and is not in the best interests of AGL Energy shareholders,” AGL Energy chairman Peter Botten said in a statement on Monday. “Under the unsolicited proposal, the board believes AGL Energy shareholders would be foregoing the opportunity to realize potential future value via AGL’s proposed demerger as both proposed organizations pursue decisive action on decarbonization.”

AGL Energy proposed in March to split the company into separate publicly traded companies: AGL Australia and Accel Energy, aiming to cut greenhouse gas emissions by as much as 60% by 2034. The demerger is progressing well and on track for completion by June this year, it said.

Under the proposed demerger, both AGL Australia and Accel Energy will develop renewable and flexible electricity generation capacity with AGL Australia building three gigawatts of new capacity by 2030 and Accel Energy supporting 2.7 gigawatts of projects in the pipeline, according to AGL Energy.

“The consortium notes today’s ASX statement from the AGL board and is disappointed (AGL) has chosen to reject what the consortium believes is a compelling alternative proposal for AGL shareholders, representing the best long-term outcome for all AGL customers and all Australians through accelerated transition to a decarbonized economy,” Brookfield and Grok Ventures said in a joint statement.

Apart from the proposed purchase price of AGL Energy, the consortium said its plan to accelerate the company’s transition into cleaner fuel (achieving net zero emissions by 2035) will require about A$20 billion in investments, the partners said. The consortium remains optimistic that an agreement can be reached with AGL Energy, they added.

“This proposal will be cheaper, cleaner and more reliable energy for customers,” Cannon-Brookes, an advocate for sustainable development had pledged in October to donate A$500 billion to nonprofits seeking to alleviate climate change. “It will create over 10,000 Australian jobs and ensure customers don’t bear the brunt of higher power prices—a likely scenario if the proposed demerger happens.”

Cannon-Brookes, cofounder and co-CEO of collaboration software firm Atlassian, has also been stepping investments in renewable energy and is a key backer of Sun Cable, billed as the world’s largest solar project, along with mining billionaire Andrew “Twiggy” Forrest. Sun Cable is constructing a mega solar farm in the deserts of Australia’s Northern Territory to supply electricity to Darwin by 2026 and to Singapore the following year via a 4,200-kilometer-long High Voltage Direct Current undersea cable.