AGL Energy has blinked at its headline planned demerger, choosing instead an easier path on Monday and consciously decoupling its chairman Peter Botten and CEO Graeme Hunt.

If anything is going to come out of this entire fiasco it’ll be that Australia remembers what was just our largest electricity company, is now just our largest greenhouse gas emitter.

Early Monday morning the board of directors confirmed it’s putting on ice long-held plans to spin off its coal-fired power stations and similarly abort the upcoming landmark shareholder vote on the defunct demerger.

The washout of Accel Energy, which would have taken control of AGL’s troublesome fleet of coal plants, comes after Atlassian billionaire Mike Cannon-Brookes’ investment vehicle Grok Ventures and other key stakeholders began to actively lobby against the split of Australia’s biggest greenhouse gas maker.

The board still reckons the demerger proposal “offers the best way forward for AGL Energy and its shareholders”, a view shared by the company’s independent expert.

However, following the energetic agitation of Grok et al, the board told the ASX this morning – with some resignation (pun intended) – “this path is no longer available”.

Under the weight of Cannon-Brookes’ now 11% stake, AGL is finding change is hard and heads need to roll.

It’s previously knocked back takeover offers by Grok and Canada’s Brookfield Asset Management, which management lambasted as “well below the fair value” on a change of control basis and relative to the expected value of the demerger.

AGL conceded the plan would’ve been backed by a majority of shareholders, “however after… opposition from a small number of investors including Grok Ventures, AGL Energy believes the Demerger Proposal will not receive sufficient support”.

This is a story of intensifying pressure from Australia’s homegrown tech billionaire established with the Mid-March revised $8.25 per share offer, which at the time now-outgoing chair Peter Botten referred to as ignoring the momentum of a “solid half year result, strong progress on the demerger, strong interest in our Energy Transition Investment Partnership and the improvements we are seeing in forward wholesale prices.”

But as Stockhead’s Jessica Cummins noted, the plan to split the coal business into a separate entity – Accel – would’ve meant the company would still be burning coal for another two decades and would still account for some 8% of the entire Aussie carbon footprint.

Botten, Hunt and the AGL directors who are now on the way out had argued for months that the demerger would unlock value for shareholders.

Joining them on the scrap heap will be AGL’s estimated expenditure to date – circa $160 million of the total $260 million estimated cost of scuppered demerger.

AGL says Hunt will stick around until a new chief executive is found.

A search they say is already underway and Cannon-Brookes is naturally part of it, since the billionaire has already said he’d be seeking two nominees to the board of AGL if he managed to nix the demerger plan of Australia’s largest greenhouse gas emitter.

AGL has also announced a strategic review, including:

  • Giving consideration to how the company moves forward in a way that will create long-term shareholder value in an environment where pressure on decarbonisation and energy affordability is accelerating
  • Utilising the extensive analytical work conducted in preparation for the Demerger Proposal and a thorough assessment of the strategic plans that were developed for AGL Australia and Accel Energy, and their respective roles in the energy transition
  • Any new approaches from third parties regarding alternative transactions
  • And further consultation with a broad range of stakeholders including Grok Ventures and other shareholders, regulators, governments and communities.