Australian energy giant AGL has dumped plans to demerge the business following the intervention of its largest shareholder Mike Cannon-Brookes.
AGL informed shareholders this morning that it was withdrawing its proposal for the demerger, which was due to be voted on early next month.
For the demerger to go ahead, it needed to gain 75 per cent approval from shareholders – a target AGL now believes it would not meet.
READ MORE: Icy polar blast to sweep Australia as winter looms
Much of this comes from an eleventh-hour play by Cannon-Brookes, Australia's third-richest person and a renewable energy advocate, who became AGL's largest shareholder via his personal investments arm Grok Ventures.
In a letter to the AGL board that was also released publicly, Cannon-Brookes said the planned demerger on June 15 was a "flawed plan".
"We intend to vote every AGL share we control at the relevant time against the demerger, and will actively encourage all AGL shareholders to do the same," Cannon-Brookes told AGL's board.
"In our view, the proposed demerger risks a terrible outcome for AGL shareholders, AGL customers, Australian taxpayers and Australia."
The demerger would have seen AGL split its retail and coal-focused operations.
READ MORE: Police reveal two key theories behind Aussie mum's shock disappearance in Mexico
Today AGL acknowledged the power of that letter, saying while the majority of AGL stakeholders still agreed with the demerger it was no longer "the best way forward".
"In these circumstances, the AGL Energy Board considers that it is in the best interests of AGL Energy shareholders to withdraw the Demerger Proposal," AGL's board of directors said.
"AGL Energy will approach the court for orders to cancel the court ordered scheme meeting and will not proceed with the associated general meeting that was to have considered various related resolutions."
READ MORE: Football fans filmed brawling following AFL game
Cannon-Brookes' broadside not only scuppered AGL's planned demerger, but some of its top brass too.
Chairman Peter Botten will resign from the board and CEO Graeme Hunt will also step down as chief executive and managing director.
Jacqueline Hey has resigned as a non-executive director effective today and Diane Smith-Gander will resign from the board following the release of AGL's full-year results in August.
"While the board believed the demerger proposal offered the best way forward for AGL Energy and its shareholders, we have made the decision to withdraw it," Botten said.
"The board will now undertake a review of AGL's strategic direction, change the composition of the board and management, and determine the best way to deliver long-term shareholder value creation in the context of Australia's energy transition."
