Soul Patts urges AGL (ASX:AGL) board to give 'more thought' to takeover bid

Major shareholder weighs in on AGL's rejection of the second takeover offer from Brookfield.

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Key points
  • Soul Patts CEO suggests AGL's board should give more thought to the improved $8.25 per share bid
  • Another shareholder, VanEck also believes the improved bid is worth exploring
  • Mike Cannon-Brookes says the latest offer is the consortium's last

Shares in AGL Energy Limited (ASX: AGL) are back in focus following a critique from one of the company's major shareholders.

That shareholder is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). The comments relate to the AGL board's rejection of an increased $8.25 per share takeover offer from the Brookfield Consortium at the beginning of the week.

The AGL board strongly believes that the bid is well below fair value for the company. However, the AGL share price is still trading below the beefed-up bid. At the time of writing, shares in the energy giant are fetching $7.26 apiece.

So, what exactly did the board of the $9 billion investment house say about AGL?

A businessman wearing a dark suit points at the camera in a gesture to represent Soul Patts encouraging AGL to give more thought to the Brookfield Consortium's takeover bid

Image source: Getty Images

Don't look a gift horse in the mouth

In a second attempt to secure AGL and accelerate its green transition, Mike Cannon-Brookes and Brookfield lobbed a sweetened deal at AGL on Monday.

While many analysts and shareholders agreed the original $7.50 bid wasn't enticing enough, the latest offer has been more warmly received.

However, AGL CEO Graeme Hunt and his fellow board members did not bite. Instead, they criticised their suitors for ignoring the potential future value of the company's planned demerger.

Commenting on AGL's reaction to the revised bid, Soul Patts chief executive Todd Barlow said:

It's possibly something that needs a bit more thought from the board. I think you are seeing smaller premiums being offered because it is being weighed up against the risks that you are seeing with the demerger.

Soul Patts is not the only shareholder that believes the offer was at least worth exploring. Global investment manager VanEck holds a $27.6 million position in AGL.

VanEck deputy head of investments and capital markets, Jamie Hannah stated:

We absolutely think that AGL should open their books to the consortium so they can do a proper due diligence.

Will it be Brookfield's last crack at taking AGL off the ASX?

The current situation is akin to a game of poker. There are two players in this game and both might be trying to bluff their way to a winning outcome.

Firstly, AGL could be playing the uninterested approach to secure another increased bid from the consortium. Secondly, the Brookfield Consortium could be parading the $8.25 as its final bid to get the Aussie energy company at a reasonable price.

Following the rejection of the revised bid, Cannon-Brookes posted on Twitter that it was 'pens down' for them.

Ultimately, we'll have to wait and see whether this is truly Brookfield's last play at AGL.

AGL share price snapshot

The AGL share price is up 16.2% since the beginning of the year.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Washington H. Soul Pattinson and Company Limited. 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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