AGL Energy Ltd (ASX:AGL) says no to Alinta and the Government

AGL Energy Ltd (ASX: AGL) has announced that it has completed its assessment of the offer from Alinta and Chow Tai Fook Enterprises.

Readers may remember that on 30 April 2018 AGL received an offer of $250 million from Alinta and Chow Tai Fook Enterprises to acquire the Liddell Power Station, the associated assets and the site.

AGL has completed its assessment and has told the bidders that it will not proceed with the offer.

The AGL Board said that the offer wasn’t in the best interests of AGL or shareholders because it significantly undervalues future cash flows to AGL of operating the Liddell Power Station until 2022 and the repurposing of the site thereafter.

To come to this conclusion AGL sought external expert advice on factors such as capital expenditure requirements across all plant components and the reliability and safety profile of the ageing power station.

AGL reaffirmed its plan to close Liddell in December 2022 and will continue its New South Wales generation plan.

The Australian Energy Market Operator has confirmed that completion of the generation plan will address the capacity shortfall that may occur as a result of Liddell’s closure.

Foolish takeaway

The AGL share price is up 1.2% this morning in response to the news, clearly investors like this decision.

AGL shares are currently trading at 13x FY19’s estimated earnings, which seems very reasonable.

I’m unsure on AGL’s future growth at the moment. The rise of electricity prices is good in the short-term, but encourages more people to solar power in the long-term.

Instead, it might be a better idea to power up your portfolio with these top blue chips.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.