Tech tycoon buys 11.3pc share of AGL in bid to halt demerger

Climate activist and tech billionaire Mike Cannon-Brookes has become AGL’s largest shareholder, acquiring a stake of more than 11 per cent in ‘Australia’s biggest polluter’.

In a letter addressed to AGL’s board, the Atlassian co-founder declared he will use his investment to halt the power company’s demerger plans, which intends to continue generating energy from coal plants until 2045.

The demerger proposal by AGL Energy would see the utility giant split into two bodies – Accel Energy for power generation and AGL Australia for its retail operations.

Cannon-Brookes said in the letter that he intends to vote against the demerger, ‘encouraging all AGL shareholders to do the same’.

“We are at a critical point in Australia’s energy transition, and in AGL’s future,” he said.

“This is about delivering cheap, reliable and clean energy to millions of families and businesses. We believe by keeping the company together, AGL can continue its long and proud history as a pioneer through energy market transitions.

“We intend to vote every AGL share we control at the relevant time against the demerger, and we call on fellow AGL shareholders to vote against the demerger to avoid further value destruction.”

Mike Cannon-Brookes claims that coal power stations are not only expensive to run, but are also unreliable, citing recent outages that occurred at Victoria’s Loy Yang A plant.

It comes after the tech tycoon and Canadian fund manager, Brookfield made an unsuccessful bid to purchase AGL earlier this year, aiming to close its coal stations several years ahead of schedule. AGL’s board were quick to respond back in February, stating the bid undervalued the company.

The decision to demerge the company will be put to a shareholder vote on 15 June 2022.

Since Cannon-Brooke’s investment group, Grok Ventures, acquired the stake on Monday, many industry insiders as well as lobbyists and consumers have shared their support.

Cannon-Brooke’s 11.28 per cent stake in AGL was valued at a whopping $654 million, as of 2 May 2022.

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Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. 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 some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex 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 some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. 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 is AGL Energy’s Proposed Demerger?

In mid-2021, AGL’s board announced a proposal to implement a demerger that would seek to split the business into two separate entities – generation and retail. AGL claims the demerger will ‘facilitate a responsible and orderly transition towards a decarbonised energy future’. Below is a snapshot of AGL’s demerger proposal:

Retail: AGL Australia

AGL Australia will operate as a multi-service energy retailer, servicing around 4.5 million customer accounts nationwide. This retail operation will have its own sustainability targets and is expected to underwrite 3 gigawatts (GW) of new renewable generation capacity by 2030. AGL Energy aims to reduce emissions to net zero by 2040.

AGL Australia diagram

Generation: Accel Energy

Accel Energy is tipped to be the nation’s largest electricity generator, investing in a variety of new renewable energy projects across Australia. It currently has an 8.9GW portfolio of electricity generation infrastructure, and plans to transition from all coal operations by no later than 2045.

Accel Energy diagram

Image credit: Jason Benz Bennee/Shutterstock.com, AGL Energy

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