AGL scraps coal demerger plans amid pressure from Cannon-Brookes

AGL Energy has scrapped its controversial coal demerger plans, after championing by climate activist and tech billionaire Mike Cannon-Brookes left fears for shareholder support.

The utilities giant revealed in a statement that it has withdrawn its proposal to demerge its retail and generational assets following concerns it ‘will not receive sufficient support to meet the 75 per cent approval threshold for a scheme of arrangement.’

It’s believed the vocal opposition of the proposal, particularly from investors such as Grok Ventures – Cannon-Brookes’ private company – influenced this decision.

Cannon-Brookes has been attempting to thwart the demerger since February this year, when he made a bid to purchase the company for approximately $8 billion.

AGL stated: “The Board of AGL Energy continues to believe that the Demerger Proposal offers the best way forward for AGL Energy and its shareholders, and this was also the view of the Independent Expert. However, the Board believes this path is no longer available.

“AGL Energy believes that the Demerger Proposal would have been supported by a majority of shareholders, both retail and institutional, many of whom are long term holders of AGL Energy shares.”

The demerger proposed a split between the company’s two main entities – supply and generation – suggesting its coal-fired generators operate under Accel Energy and its retailer energy services run as AGL Australia.

These entities proposed two different net zero carbon emissions target dates – 2040 for AGL Australia and 2047 for Accel Energy.

Cannon-Brookes believed that splitting assets wouldn’t aid in reducing AGL’s carbon emissions and has been urging shareholders to reject the demerger since acquiring an 11.3 per cent stake in the company earlier this month.

According to government data from 2021, AGL is Australia’s largest emitter of greenhouse gases.

AGL’s failed demerger should reflect the importance of climate change actions among companies, particularly in the energy industry, senior campaigner at Greenpeace Australia Pacific, Glenn Walker said.

“AGL’s humiliating demerger backflip has to go down as one of the most bungled and misguided attempts at a corporate restructure in Australian history. It should be a lesson for any company that failing to act seriously on climate carries serious consequences,” he said.

“After wasting well over $160 million of shareholders’ money on this dud demerger designed only to prolong the lifespan of polluting coal, AGL’s leadership team has got to go. The board that led Australia’s biggest energy utility to the point of ruin can’t be trusted with a strategic review of the company.

“There must be a sweeping renewal of the board to transform AGL. Swift coal closure and a decisive energy transition will take AGL from Australia’s biggest climate polluter to a renewables leader.”

Amid ditching the proposal, AGL has also revealed its chairman, Peter Botten will resign once a replacement has been appointed. Three other board members are also expected to depart over the coming months.

A vote on the demerger was originally planned for 15 June 2022.

AGL Plans & Prices

Here are the AGL Energy plans on our database for NSW. These are products from a referral partner†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the AGL Energy plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the AGL Energy plans on our database for SE QLD. These are products from a referral partner†. These costs are based on the Energex energy network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are the AGL Energy plans on our database for South Australia. These are products from a referral partner†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

What does AGL plan to do now?

Moving forward, AGL has since stated it will review its strategic direction, with a specific focus on its consideration of shareholder value, particularly regarding decarbonisation and energy affordability. The retailer also aims to examine new approaches put forth by third parties and further consult with a wide range of shareholders, including Grok Ventures – the company representing Cannon-Brookes.

As for Cannon-Brookes, the tech billionaire has proposed that two Grok Ventures representatives take a place on the AGL board, as well as a new independent chair be appointed for AGL in light of Peter Botten’s resignation.

AGL is expected to report back to shareholders on its progress in September.


Image credit: Jandrie Lombard/Shutterstock.com

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