Tech billionaire Mike Cannon-Brookes has bought up AGL Energy shares in his continued pursuit to block AGL’s proposed demerger.
Through his family’s private investment group, Grok Ventures, Mr Cannon-Brookes purchased 11.3 per cent in AGL after the market closed on 1 May, making him the largest shareholder.
Mr Cannon-Brookes made it clear in a letter sent to AGL’s board of directors that he intended to block the upcoming vote on the company’s demerger.
The demerger would separate the company into two entities. The coal power generation business would become Accel Energy and the retailing division for its 4.5 million customers would become AGL Australia.
The demerger needs 75 per cent approval to go ahead and Mr Cannon-Brookes urged other shareholders to reject the demerger as well.
Mr Cannon-Brookes said he believed the demerger would lead to two weaker entities, which will be more costly to run and delay the transition to net-zero.
According to Mr Cannon-Brookes, AGL is the largest contributor to carbon emissions in Australia and as a result of this demerger, would become responsible for maintaining coal-fired power plants longer than necessary.
Mr Cannon-Brookes said he believed by remaining one entity, AGL could begin shutting down its coal power generators and take itself out of coal power by 2035. This would encourage the company to turn to renewables.
In response, AGL said it remains committed to delivering the demerger, which the board considers is in the best interests of shareholders.
In a letter to shareholders, AGL said the demerger “creates the potential to maximise growth in the value of shares by giving each company the freedom to pursue individual strategies and growth initiatives”.
“The demerger will create two industry-leading companies that will advance Australia’s new energy future, enabling a responsible transition of Australia’s energy system towards decarbonisation,” the shareholder letter said.
This comes after AGL rejected Cannon-Brookes two takeover bids, one in February and the other in March, and the hit to AGL’s profits following the shutdown of a unit at its Loy Yang A power station in Victoria due to an electrical fault.
AGL intends to complete the demerger over the next few months with the shareholder vote scheduled for 15 June 2022.