AGL Energy has rejected an unsolicited takeover proposal that would see Brookfield Consortium acquire 100 per cent of the company shares and close its coal-fired power stations early.
The consortium, comprised of Grok Ventures and Canadian company Brookfield Asset Management, proposed to acquire AGL for $7.50 per share by way of a scheme arrangement.
The AGL Energy Board considered that the proposal materially undervalued the company on a change of control basis and was not in the best interests of AGL Energy shareholders.
The unsolicited proposal represents a:
- 4.7 per cent premium to the closing price of AGL Energy of $7.16 on 18 February 2022
- 4.2 per cent premium to the volume-weighted average price (VWAP) since AGL Energy’s 1H22 Results announced on 10 February 2022 of $7.201
- 4.3 per cent premium to the one-month VWAP of $7.192
The unsolicited proposal was a cash proposal, with an option for AGL Energy shareholders to elect a scrip alternative in the Brookfield Consortium’s acquiring vehicle (subject to a maximum participation cap of 20 per cent AGL Energy shareholder ownership in the acquiring vehicle).
The unsolicited proposal provided limited other information regarding the structure of the acquiring vehicle and the scrip alternative.
The unsolicited proposal is also subject to a number of other conditions and assumptions, including due diligence, and approvals from the Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB).
The AGL Energy Board said it remained committed to progressing the proposed demerger of AGL Energy to establish two separately listed businesses, AGL Australia and Accel Energy, and considered the proposed demerger would deliver better value for AGL Energy shareholders.
AGL Energy Chairman, Peter Botten, said, “The proposal does not offer an adequate premium for a change of control and is not in the best interests of AGL Energy shareholders.
“Under the unsolicited proposal, the AGL Energy Board believes its shareholders would be forgoing the opportunity to realise potential future value via AGL Energy’s proposed demerger as both proposed organisations pursue decisive action on decarbonisation.”
Since announcing the structural separation proposal on 31 March 2021, the AGL Energy Board said it has rigorously tested various alternative options available to it and continues to believe the proposed demerger is in the best interests of AGL Energy shareholders.
As announced on 10 February 2022, AGL said the proposed demerger is progressing well and is on track for completion by 30 June 2022.
The AGL Energy Board said it is confident that the demerger will create a strong future for both parts of the business, resulting in two industry leading companies both with the ability to unlock value as each business pursues their individual tailored purposes and strategies.
AGL Australia said its climate commitments aim for a 50 per cent reduction in emissions by 2030 and Accel Energy would achieve a 55-60 per cent reduction in emissions by no later than 2034, with the potential to bring this forward should the system be ready.