ASX-listed energy company AGL Energy Ltd (ASX: AGL) this morning announced an unsolicited and “highly conditional” offer from Hong Kong’s Chow Tai Fook Enterprises and Alinta Energy Pty Limited to acquire its Liddell Power Station for $250 million.
AGL is one of Australia’s biggest energy providers, with the largest energy generation portfolio. Liddell is a coal-powered thermal power station located in Muswellbrook, New South Wales.
In its ASX announcement, AGL said it has undertaken a review of the offer and will not proceed because the offer undervalues the asset.
“AGL has completed a thorough assessment of the Offer and, after careful consideration, has advised Chow Tai Fook and Alinta that it will not proceed any further with the Offer,” AGL Energy’s announcement read.
“The Offer significantly undervalues future cash flows to AGL of operating the Liddell Power Station until 2022 and the repurposing of the site thereafter.”
AGL Energy plans to close Liddell in December 2022 and repurpose the site. This is part of AGL’s long-term strategy to grow its renewable energy portfolio.
Some industry participants and politicians have grown concerned about potential baseload power shortages if more coal stations are closed. However, AGL said the Australian Energy Market Operator has confirmed that its medium-term plans for Liddell will address capacity shortfalls in the market.
Do you like finance and investing?
Did you know it’s free to join The Rask Group’s Investor Club Newsletter? It’s a regular (usually weekly) news and educational update on financial markets, investing and unique strategies. Join today and get ready to laugh and learn.