Australian tech billionaire and climate activist Mike Cannon-Brookes has bought an 11.28 per cent stake in AGL Energy in a corporate raid to block a proposed demerger that would split the company’s coal-fired power plants from its retail business.
Cannon-Brookes, co-founder of software company Atlassian, said the demerger was “globally irresponsible” and that he was working to persuade other shareholders to vote it down, arguing that the cash should be used to invest in renewables.
The move comes two months after he and Canadian investment group Brookfield Asset Management offered to buy AGL for $3.84bn. Brookfield and Cannon-Brookes had proposed to take AGL private, hasten the closure of its coal plants and invest A$20bn (US$14bn) on renewable generation to replace the coal.
The AGL board rejected the consortium’s first and second offer, saying they undervalued the company. Brookfield and Cannon-Brookes said they would make no further offers.
But in a letter to the AGL board on Monday, Cannon-Brookes signalled he had not given up on his ambition to influence the company.
“We fundamentally believe there can be a better future for AGL . . . A future that accelerates the transition to net zero, and a future that creates opportunities for AGL and value for its shareholders along the way,” he said.
“We firmly believe the proposed demerger is a flawed plan that will fail to achieve these goals. As a result, we intend to vote every AGL share we control at the relevant time against the demerger, and will actively encourage all AGL shareholders to do the same.”
A spokesperson for Cannon-Brookes said there was no plan to make a new offer to buy the company outright. Brookfield said it was not involved in the move.
AGL is one of Australia’s largest energy companies, with more than 4mn customers, three large coal plants and a number of renewable generation assets. It is Australia’s biggest carbon emitter, producing about 8 per cent of the country’s greenhouse gas emissions.
Cannon-Brookes, who took the stake through his private investment fund Grok Ventures, argued that AGL’s plan to split the coal plants from the retail business would miss the opportunity to use the company’s balance sheet to invest in renewable generation.
“AGL is currently the single largest contributor to carbon emissions in Australia and the demerger will entrench a position that is inconsistent with limiting climate change,” he said.
He said the retail side of the demerged company, AGL Australia, would continue to source the majority of its energy from the coal generation business, to be called Accel Energy.
The 11.28 per cent stake cost Cannon-Brookes more than A$650mn. A spokesperson said that was entirely funded by Grok, the personal investment vehicle of Cannon-Brookes and his wife. Cannon-Brookes is Australia’s fourth-richest person with an estimated net worth of A$26bn, according to a March list published by The Australian newspaper.
AGL shareholders will vote on the proposed demerger in June. The deal needs 75 per cent of votes in favour to go through. Cannon-Brookes believes he can persuade enough shareholders to oppose the demerger to ensure it is blocked.
In a letter to shareholders on Monday — before Cannon-Brookes acquired his stake in the company — AGL’s chair Peter Botten said the board was committed to the demerger. “AGL Australia and Accel Energy will be established with strong foundations for future success and growth as independent, ASX-listed companies,” he said.