Billionaire Cannon-Brookes to Seek Stake in Australia’s AGL 

(Bloomberg) -- Billionaire Mike Cannon-Brookes bought 11% of AGL Energy Ltd. and will oppose the utility's plan to demerge its retail and power generation assets under a proposal that would keep coal-fired plants running for decades.

The acquisition makes the Atlassian Corp. founder's Grok Ventures the largest AGL shareholder, his personal office said in a statement. The stake cost about A$650 million ($460 million), according to Bloomberg calculations.

“The demerger makes no sense, or cents,” Cannon-Brookes said in a message posted to Twitter. “We believe it destroys value for everyone -- shareholders, employees, Australia and the planet.”

AGL, formed in 1837, rejected two takeover approaches earlier this year from a consortium including Cannon-Brookes and led by Brookfield Asset Management Inc., insisting it can create more value by separating its power generation and electricity retailing businesses.

The utility's shares fell as much as 2.6% by 10:55 a.m. Tuesday in Sydney.

AGL's board remains committed to implementing the proposed demerger by the end of next month, and to achieving “a responsible transition of Australia's energy system,” the utility said in a Tuesday statement. Grok had not contacted AGL before buying the shares, the company said late Monday.

Cannon-Brookes, who had planned with Brookfield to accelerate AGL's transition away from coal and achieve net-zero emissions about a decade earlier than current targets, will vote against the demerger proposal at a meeting scheduled for mid-June, he said in a letter to the company's board.

“The chances of a demerger going ahead now will be significantly lower,” said Jamie Hannah, deputy head of investments and capital markets at Van Eck Associates Corp., which owns the utility's shares. “There's already an underlying feeling among investors that they don't want the demerger to go ahead, this will play into that.” Van Eck will study more details before deciding how to vote, he said. 

Sydney-based AGL's plan risks destroying shareholder value, and the proposed generation business Accel Energy will be “at significant risk of becoming a stranded asset given its meaningful coal exposure,” Cannon-Brookes said.

AGL is Australia's largest emitter of scope-one greenhouse gas emissions and “the demerger will entrench a position that is inconsistent with limiting climate change,” Cannon-Brookes said in the letter. 

Under AGL's plans, Accel would aim to shutter its coal operations by 2045 or earlier, the company said in a Monday filing. Cannon-Brookes and Brookfield had pledged to deliver a A$20 billion transition plan to close down the assets faster and replace them with cheaper renewable energy. 

Global Infrastructure Partners will become a 49% partner in AGL's A$2 billion investment vehicle intended to help Accel transition its coal-fired power plants to low-carbon sites, AGL said in a separate statement Tuesday. 

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