Australia’s top power producer AGL Energy [AGL:AU] has abandoned plans to split the company due to strong resistance from its main shareholder, Mike Cannon-Brookes, who is also an active environmentalist, as reported by Reuters on May 30. While the company continues to believe that the planned demerger is the best route for the firm and its shareholders, Cannon-Brookes objected with the consideration that the plan would hinder AGL Energy’s transformation into a renewable energy provider.
AGL Energy announced its spin-off proposal in mid-2021, with plans to split the company into two parts, namely an energy retailer named AGL Australia, and a power producer named Accel Energy. Under the plan, Accel Energy will take over AGL Energy’s coal-fired power facilities. As a result of shareholder opposition, AGL Energy decided to abandon the demerger, as the decision requires a 75% approval from shareholders, the prospect of which has been denied by the objection of Cannon-Brookes, who controls 11.3% of the company’s shares. Other shareholders, such as fund manager Geoff Wilson and Australian pension fund HESTA, are likewise concerned about the group’s ability to support decarbonization following the demerger. Following the decision to forgo the plan, AGL Energy’s chairman Peter Botton, CEO Graeme Hunt, and two other directors will step down. Amid Australia’s energy transition, AGL Energy’s board of directors will conduct a strategic review to optimize the board and management, as well as determine the best method to create long-term shareholder value.