Power company AGL Energy has rejected a multibillion-dollar takeover bid from Australian tech billionaire Mike Cannon-Brookes and Canadian investment firm Brookfield.
The preliminary and non-binding offer comprising $7.50 per share was received from Grok Ventures and Brookfield on Saturday, AGL confirmed.
The target’s board on Monday said the offer “materially undervalues the company on a change of control basis and is not in the best interests of AGL Energy shareholders”.
The offer represented a 4.7 per cent premium to the company’s closing share price of $7.16 on Friday when AGL’s market value was about $5 billion.
The offer was for cash, although shareholders would have had an option to accept a scrip alternative in the acquiring vehicle, AGL noted.
“The unsolicited proposal provided limiter other information regarding the structure of the acquiring vehicle and the scrip alternative,” the board said.
The AGL board stressed it remains committed to its plans to demerge the company and split it into two listed entities – energy retailer AGL Australia and electricity generator Accel Energy – by June 30.
“Under the unsolicited proposal the board believes AGL Energy shareholders would be forgoing the opportunity to realise potential future value via AGL Energy’s proposed demerger as both proposed organisations pursue decisive actions on decarbonisation,” Chairman Peter Botton said in a statement.
The two proposed entities have been assigned emissions reductions targets, putting them on course to reach net zero in coming decades.
Under the climate goals, Accel Energy will bring forward the closure of the Loy Yang A power station in Victoria to 2045, from 2048.
It will also close the Bayswater power station in the NSW Hunter region by 2033, from 2035 previously.
The bid comes more than 10 days after AGL posted its 2021/22 first-half results.
AGL’s bottom line first-half net profit came in at $555 million, after last year’s result was hit by significant one-off items resulting in a more than $2 billion loss.