Finance Finance News AGL dumps controversial demerger plan

AGL dumps controversial demerger plan

AGL's contentious plan to split company in two dumped

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AGL Energy has ditched plans to split the company into two after strong opposition by a major investor and two weeks before shareholders were due to vote on the proposal.

“The board of AGL Energy continues to believe that the demerger proposal offers the best way forward for AGL Energy and its shareholders, and this was also the view of the independent expert,” the company said in a statement on Monday.

“However, the board believes this path is no longer available.”

AGL had proposed splitting the company into an energy retailer, called AGL Australia, and a coal-fired electricity generator, called Accel Energy.

The new entities were to have a target to reduce emissions to net zero by 2040 and 2047, respectively.

AGL’s biggest shareholder, Grok Ventures – representing Australian billionaire Mike Cannon-Brookes – was staunchly opposed to the split.

Shareholders were due to vote on the demerger plan on June 15.

AGL said it believed a majority of retail and institutional investors would have supported the demerger.

But this was not going to be enough to meet the 75 per cent approval threshold to allow the demerger to proceed.

The decision means some AGL board and management heads will roll.

They include chairman Peter Botton, chief executive Graeme Hunt and two directors.

AGL’s board said it would “review” the company’s strategic direction and would consult with Grok Ventures and other key shareholders and stakeholders, including government and regulators.