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· Posted on
February 21, 2024

Mike Cannon-Brookes and Brookfield might still pursue their bid for AGL

The Atlassian co-founder has been reportedly chatting to shareholders to garner support for his consortium.

What's the key learning?

  • Mike Cannon-Brookes and investment firm Brookfield Asset Management made a $5 billion takeover bid for AGL last month
  • They increased the offer, but AGL still rejected it, saying it just doesn't take into consideration the value AGL could bring shareholders in the future via its demerger
  • A  demerger occurs when a business unit is carved out and listed as a separate company on the stock exchange. These can often bring shareholders lots of value
  • So if MCB wants AGL, he's going to have to convince shareholders that his offer is worth more than the demerger.

Background: Mike Cannon-Brookes and investment firm Brookfield Asset Management made a $5 billion takeover bid for AGL last month. It was rejected pretty much ASAP.

 

What happened: Last week, MCB had another crack, this time offering $5.5 billion. But again, it wasn't enough. Cannon-Brookes said he was done with AGL, but he's reportedly been contacting shareholders to get support for his consortium. 

 

What else: In any case, AGL reckons MCB's offer just isn't taking into consideration the value AGL could bring shareholders in the future via its demerger.

 

🔔 What's the key learning?

 

💡We often hear about mergers and acquisitions in the business world creating value for shareholders. But demergers and spin-offs can also create value for shareholders. 

 

💡A demerger occurs when a business unit is carved out and listed as a separate company on the stock exchange. Generally, shareholders in the existing business automatically acquire shares in the newly-created, demerged biz. 

 

💡South32 was spun-off from BHP Billiton in 2015, and has seen its share price nearly double. Domain was spun-off from Fairfax, and it's still performing well. So if MCB wants AGL, he's going to have to convince shareholders that his offer is worth more than the demerger.

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