On Monday, AGL Energy rejected an unsolicited takeover bid from tech billionaire Mike Cannon-Brookes and Canadian asset management giant Brookfield, saying the offer “materially” undervalued the company.
However, the director of the Monash Energy Institute, Professor Ariel Liebman, disagrees.
Not only is Professor Liebman of the opinion that the offer is “very generous”, but he argued that in the absence of proper government policy, “this is one of the second-best options” to accelerate retirements and energy transition.
“The private investment sector comes to the party with some left field approaches and shows how it could be done. This is not necessarily optimal but much better than inaction,” Professor Liebman said.
In a statement issued by Brookfield and Cannon-Brookes’ Grok Ventures on Monday, the pair said that the bid’s intention was to help AGL Energy achieve net zero emissions by 2035 by investing in clean energy.
But AGL said the $7.50 per share cash proposal undervalued the business, instead choosing to proceed with its decoupling intentions.
“This was a game changing offer. I expect to see many more of these philanthropy motivated opportunities being explored,” Professor Liebman said.
“The offer to AGL shareholders seemed very generous and I imagine many shareholders would be very tempted. I find it hard to believe they will get much better offers than that for the legacy fossil generation portfolio in the future.”
Noting that everything is aligning towards accelerated retirement of coal stations, including a possible return to carbon pricing in the next 10 years, Professor Liebman cautioned that “the shareholders may never get as good a price again”.
Earlier this month, AGL brought forward the planned closure of the Bayswater black coal plant in NSW to no later than 2033 and Loy Yang A Power Station in Victoria to 2045.
Commenting on the takeover bid on Monday, Treasurer Josh Frydenberg said the government intends to “sweat” fossil fuel assets.
“We need to ensure that our coal‑fired generation of electricity runs to its life, because if it doesn’t, electricity prices go up, they don’t go down,” Mr Frydenberg told media.
“Our government is very committed to ensure we sweat those assets for their life to ensure that businesses can get access to the electricity and energy that they need at affordable prices to keep people in jobs.”
