After the board declared the offer was not high enough and decided to knock it back on Monday,top 10 AGL shareholder Van Eck voiced support for the consortium’s plan for the future of AGL’s coal assets and doubts about the merits of the board’s demerger strategy.
“We are mixed on the demerger,” Jamie Hannah,Van Eck’s deputy head of investments,toldThe Age and theHerald. “We are not positive it will add value to the company.”
The demerger of AGL,which will be put to a shareholder vote on June 22,includes splitting off its carbon-heavy power stations into a new entity that would keep burning coal into the mid-2040s. The other company would house AGL’s retailing division supplying 4.5 million customer accounts.
Institutional Shareholder Services (ISS),an adviser to large global investors,also said there were significant concerns about AGL’s demerger plan. “It’s hard to see what the value is in it,” said Vas Kolesnikoff,ISS head of Australia and New Zealand research.
Explaining the board’s decision to reject the consortium’s latest bid,AGL chief Graeme Hunt said the offer was still “below the fair value of the company”,and understated the value to be unlocked through the proposed demerger later this year.
“It’s clear the consortium sees value in the energy transition and sees value in the two businesses we are creating through the demerger and the role they will play in the transition – the issue is they don’t want shareholders to benefit from that value and are looking to acquire the company at a sub-economic premium,” Mr Hunt said.