AGL (ASX:AGL) share price up 9% amid takeover approach from Atlassian co-founder and Brookfield

AGL has received a takeover approach…

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Key points

  • AGL has received a takeover approach from Brookfield Asset Management and Atlassian co-founder Mike Cannon-Brookes’ private investment firm, Grok Ventures
  • AGL believes it undervalues the company and has rejected the proposal
  • The AGL Board believes its demerger will create more value for shareholders

The AGL Energy Limited (ASX: AGL) share price is pushing higher on Monday morning.

At the time of writing, the energy company’s shares are up 9% to $7.82.

Why is the AGL share price rising today?

Investors have been bidding the AGL share price higher today after it received and rejected a takeover approach. Buyers appear optimistic that an improved offer may be tabled down the line.

According to the release, AGL received an unsolicited, preliminary, non-binding indication of interest from a consortium led by Brookfield Asset Management and Atlassian co-founder Mike Cannon-Brookes’ private investment firm, Grok Ventures.

The parties, collectively known as the Brookfield Consortium, are wanting to acquire 100% of the shares in AGL Energy for $7.50 per share by way of a scheme of arrangement. This represents a premium of just 4.7% to the AGL share price at the close of play on Friday.

The AGL Energy Board advised that it believes the proposal materially undervalues the company on a change of control basis and is not in the best interests of shareholders. As a result, it has rejected it and advised shareholders that they do not need to take any action.

What now?

The AGL Energy Board has stated that it remains committed to progressing the proposed demerger of AGL Energy to establish two separately listed businesses, AGL Australia and Accel Energy.

It believes the proposed demerger will deliver better value for AGL Energy shareholders than this takeover proposal.

AGL Energy’s Chairman, Peter Botten, commented: “The proposal does not offer an adequate premium for a change of control and is not in the best interests of AGL Energy shareholders. 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.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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