Australia’s top power producer AGL Energy has cancelled plans to split the company and announced that its chairman and CEO will step down, capitulating to opposition from billionaire climate activist Mike Cannon-Brookes, who is the company’s main shareholder.
AGL had proposed the demerger to shareholders in February, but confirmed this morning in a statement to the Australian Securities Exchange that the plan was being withdrawn in light of resistance led by Cannon-Brookes. The firm made it clear that the board still believed the demerger was “the best way forward” but it had become clear that the proposal would fail to secure the required support from 75% of shareholders.
The company confirmed that chairman Peter Botten and CEO Graeme hunt would both step down from their positions once suitable replacements had been found. AGL shares fell by 4.6% in early trading with the decision plunging the firm into uncertain territory.
“Certain shareholders may be celebrating victory today, but what follows is unclear, as at present AGL have a hamstrung chairman and CEO plus no clear strategy,” Sunborn Consulting’s Simon English said.
The decision comes in the face of growing calls for the company to speed up the closure of its coal-fired plants and invest in renewable energy, with AGL currently Australia’s largest carbon emitter.
The firm maintains that demerging its coal-focused generation business would have been the best course of action, but accepts that resistance from Cannon-Brookes, who bought 11.3% of the company’s shares earlier this month with the express intent of blocking the merger, meant that successfully passing the proposal was unlikely.
AGL said it would carry out a strategic review, focusing on possible decarbonization initiatives, and that they would engage further with Cannon-Brookes to reach a solution suitable to all involved parties.
Cannon-Brookes responded to the news on Twitter, describing it as a “huge day for Australia”.
Grok Ventures, Cannon-Brookes’ investment vehicle, said it had requested a meeting with the AGL board members appointed to oversee the review, and that it would be “seeking assurance from the co-chairs that the ‘strategic review’ is not code for selling off AGL’s assets piece by piece”.
Mr Cannon-Brookes, who is co-CEO of the software company Atlassian, has made a name for himself of late as a leading environmental activist, and has been increasing investments in green energy.