Australia’s largest power company and biggest polluter AGL Energy has rejected a takeover bid that would’ve seen the company reach net zero by 2030.
Australian software billionaire and Atlassian co-founder Mike Cannon-Brookes and Canadian asset management giant Brookfield lodged an unsolicited bid on Saturday to buy the company for $7.50 per share, or around $8 billion.
It was a pretty generous offer as it was 4.7 per cent higher than the company’s shareholder price on Friday, but it came with a condition: AGL would have to reach a target of net-zero target emissions by 2035. This would’ve meant bringing forward its scheduled end to coal and the close of one of its largest coal-fired power stations 15 years early in 2030.
The new owners would’ve also halted a planned demerger that would have separated the company’s fossil fuel assets into a new company to be called Accel Energy.
On Monday AGL rejected the preliminary offer and said it was not in the best interest of shareholders, so coal is here to stay a while longer.
AGL chair Peter Botten said in a statement the proposal did not offer shareholders a premium for such a major change to the company.
“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 action on decarbonisation,” Botten said.
But Cannon-Brookes said on Monday he would continue to work on the potential takeover.
Speaking on ABC’s RN Breakfast he said AGL was responsible for more than eight per cent of Australia’s annual carbon emissions — which is also more than Sweden, Ireland or New Zealand emit overall in a year — and it would take big moves like his to see major companies change and therefore limit the effects of climate change.
“On a global scale this is a massive decarbonisation effort,” Cannon-Brookes said.
“The economics stacks up, the science stacks up. What we require is just the gumption to go it and actually make it happen, and that’s what we’re trying to do.”
Prime Minister Scott Morrison was questioned by journalists about Cannon-Brookes’ bid on Monday and said the government did not want any coal plants to close early.
“We need to ensure that our coal-fired generation of electricity runs to its life, because if it doesn’t, electricity prices go up,” Morrison said.
But the market has long been shifting to renewables so we know this isn’t true and we’d be better off in the long run scrapping coal ASAP.
Cannon-Brookes and Brookfield managing partner Stewart Upson have both said the takeover would lead to lower power bills for consumers and create more jobs while tackling climate change.
“To have a material impact on net zero transition, investors need to do more than simply avoid carbon-intensive businesses and we need to be willing to tackle emissions head on,” Upson said.
AGL has already responded to pressure around reducing coal-fired power this month and announced it would close the and Loy Yang A in Victoria’s Latrobe Valley in 2045, ahead of 2048 as previously planned. Loy Yang A produces about a third of the state’s electricity.
But its commitment was a bit wishy-washy because the company said the closure would depend on “the readiness of the entire energy system to operate without our critical baseload generation”.
At this rate it seems coal is here to stay for at least the rest of this decade.
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