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Speaker 1: Good morning and welcome to the Daily Oas today is Tuesday,

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Speaker 1: the twenty second of February. I'm Zara Sidler, joined by

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Speaker 1: Sam Kozlowski here to take you through the big news

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Speaker 1: of the day. Sam, yesterday was a stressful day for commuters.

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Speaker 1: Talk us through it.

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Speaker 2: No trains in Greater Sydney were active yesterday after negotiations

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Speaker 2: between the New South Wales government and the Rail, tram

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Speaker 2: and Bus union broke down in the early hours of

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Speaker 2: Monday morning. We heard anecdotal stories that a lot of

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Speaker 2: people actually knew that there was a strike because they

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Speaker 2: saw it on the Daily OS at about seven thirty am.

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Speaker 2: There is an ongoing dispute between the two parties over

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Speaker 2: who caused the trains to be canceled. Yesterday the Fair

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Speaker 2: Work Commission adjourned the dispute until Wednesday.

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Speaker 1: Prime Minister Scott Morrison has requested for an investigation after

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Speaker 1: the ADF accused a Chinese navy vessel of shining a

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Speaker 1: laser at an Australian aircraft. Morrison said this is completely

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Speaker 1: unacceptable and so we've demanded there be an investigation of

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Speaker 1: what occurred on the vessel.

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Speaker 2: Keeping an eye on tensions in Ukraine and US President

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Speaker 2: Joe Biden and Russian leader of Vladimir Putin have agreed

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Speaker 2: in principle to a summit over Ukraine, and this is

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Speaker 2: according to French President Emmanuel Macron. However, the US will

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Speaker 2: only participate in the meeting if Russia does not invade Ukraine.

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Speaker 2: That is somewhat of a caveat. The meeting is set

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Speaker 2: to occur after the US Secretary of State Anthony Blincoln

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Speaker 2: and Russian Foreign Minister Sergei Lavrov meets on the twenty

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Speaker 2: fourth of February.

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Speaker 1: And today's good news, the Victorian government has announced an

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Speaker 1: one hundred million dollar voucher scheme, which will provide residents

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Speaker 1: with rebates for entertainment, dining and travel. There will also

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Speaker 1: be a regional areas program which will provide rebates on

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Speaker 1: food and wine experiences. The voucher scheme was announced as

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Speaker 1: part of a broader two hundred million dollar business stimulus

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Speaker 1: package yesterday.

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Speaker 2: Today we're looking at an Aussie tech billionaires surprise to

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Speaker 2: take over the country's largest electricity company.

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Speaker 3: AGL is the single largest emitter in the country. It

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Speaker 3: represents over eight percent of Australia's emission That would make

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Speaker 3: it one of the biggest decarbonization projects on Earth, and

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Speaker 3: I think Australia we're really proud of that we can

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Speaker 3: do it in an economic way that creates jobs and

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Speaker 3: drives prices down. It's a very sensible plan.

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Speaker 2: So that was billionaire Mike cannon Brooks there on his

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Speaker 2: plan to take over Australian electricity company AGL. Joining me

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Speaker 2: today to tell us more is TDA journalist Tom Crowley. Tom,

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Speaker 2: tell me what is Mike cannon Brooks's plan and importantly

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Speaker 2: can he actually pull this off?

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Speaker 4: Gooday, Sam, So, as you've heard there in those clips

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Speaker 4: that the plan is basically to take down Australia's biggest

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Speaker 4: polluter from the inside, if you like.

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Speaker 3: So.

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Speaker 4: AGL is our largest electricity provider and eighty three percent

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Speaker 4: of its electricity comes from coal, which makes it our

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Speaker 4: worst emitter. We heard from Mike canon Brooks that it

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Speaker 4: admits basically as much as the entire countries of Switzerland

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Speaker 4: or New Zealand or Ireland. So it's kind of a

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Speaker 4: big deal just on its own as one company, and

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Speaker 4: at the moment AGL plans to exit coal all together

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Speaker 4: by twenty forty five. It's got a series of closure

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Speaker 4: dates for its various plans, but the final date is

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Speaker 4: twenty forty five. Well, Mike canon Brooks thinks that that's

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Speaker 4: not good enough, and he's putting his money where his

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Speaker 4: mouth is. So he's joined forces with the Canadian infrastructure

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Speaker 4: company Brookfield to make an offer basically to buy AGL,

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Speaker 4: so to buy one hundred percent of its shares for

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Speaker 4: about eight billion dollars, and he says that if he succeeds,

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Speaker 4: he plans to get them out of coal fifteen years

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Speaker 4: early by twenty thirty. Now, that initial offer of eight

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Speaker 4: billion has been rejected by agl's board, but canon Brooks

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Speaker 4: confirmed yesterday that he's in it to win it, and

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Speaker 4: he's going to prepare to make another more generous bid soon.

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Speaker 2: So presumably that offer was rejected by the board of

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Speaker 2: AGL because it wasn't lucrative enough for its shareholders. What

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Speaker 2: does Mike canon Brooks have to do now? Does he

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Speaker 2: have to make them an offer they literally cannot refuse.

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Speaker 4: Yes, it does make him sound a little bit like

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Speaker 4: a mobster, but that that is pretty much what's required

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Speaker 4: from here. So the important place to start within explaining

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Speaker 4: this is that because AGL is a publicly listed company,

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Speaker 4: So that means that it's got shareholders, and you or

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Speaker 4: I or our listeners could choose to be one of

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Speaker 4: those shareholders. The shareholders are ultimately in charge of AGL,

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Speaker 4: and the decision about whether to accept a takeover bid

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Speaker 4: eventually rests in their hands. But the board, which makes

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Speaker 4: decisions on behalf of shareholders and which has a legal

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Speaker 4: requirement to act in their best interests. If the board

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Speaker 4: thinks that the offer is a low ball and that

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Speaker 4: it undervalues the company, they can just reject it out

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Speaker 4: of hand. And that's pretty much what's happened here. So

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Speaker 4: that eight billion dollar bid translates to seven dollars fifty

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Speaker 4: per share, And just to sort of put that in context,

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Speaker 4: AGL was worth seven dollars sixteen, so just a little

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Speaker 4: bit less at the close of trading last Friday, and

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Speaker 4: it's shut up higher than that yesterday. So that opening

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Speaker 4: bid from Mike Cannon Brooks was not a huge one,

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Speaker 4: and that's part of why the AGL board was able

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Speaker 4: to reject it without shareholders. But if canon Brooks and

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Speaker 4: Brookfield come back with a better offer, so kind of

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Speaker 4: that that Godfather offer, if you like, then it might

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Speaker 4: have to go to a shareholder vote. Now, I think

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Speaker 4: it's fair to say it's pretty uncommon for shareholders to

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Speaker 4: vote against the wishes of the board, who are likely

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Speaker 4: to oppose even a bigger bid. Quite often shareholders don't

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Speaker 4: even decide themselves on their own votes. They just assign

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Speaker 4: their voting rights to proxies on the board or to

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Speaker 4: active investors. But of course, this is going to be

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Speaker 4: a fairly high profile bid, so it's certainly not inconceivable.

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Speaker 4: And what we've seen today in Mike cannon Brooks's media

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Speaker 4: statements and yesterday, is that he's really appealing directly to

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Speaker 4: shareholders and trying to convince them that his offer is

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Speaker 4: a good one, because at the end of the day,

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Speaker 4: they're the ones that matter.

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Speaker 2: And what is exactly his pitch to investors? It strikes

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Speaker 2: me that it would be a pretty big task to

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Speaker 2: convince average punters who hold stock in AGL to vote

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Speaker 2: in favor of essentially running the company into the ground.

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Speaker 2: What's the go there.

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Speaker 4: Yeah, so I think it's fair to say, vote for

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Speaker 4: me and I'll destroy your company would not be a

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Speaker 4: very persuasive pitch on its own, So it's fair to

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Speaker 4: say that that's not the message. The plan from Mike

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Speaker 4: cannon Brooks is basically to turn AGL into a renewable

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Speaker 4: energy company, so to replace the coal with renewable generation

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Speaker 4: technology and with the sorts of technology that's required to

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Speaker 4: store and to transport that energy. So it's sort of

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Speaker 4: similar in a way to what AGL is planning over

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Speaker 4: a longer time horizon. AGL wants to achieve that through

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Speaker 4: a merger and a slightly more complex arrangement. But Mike

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Speaker 4: cannon Brooks's answer for the company is to replace its

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Speaker 4: coal generation with renewable generation, and a big part of

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Speaker 4: his pitch is that doing this and doing this earlier

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Speaker 4: makes good economic sense and that it's actually going to

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Speaker 4: be profitable. So he says that renewable energy is cheaper

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Speaker 4: than coal generated energy in Australia, he says it'll create

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Speaker 4: more jobs, of course, it will lower emissions, and he

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Speaker 4: says it'll be more reliable. So he points out that

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Speaker 4: the coal infrastructure that's currently used in our national energy

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Speaker 4: market is aging and unreliable. So his pitch is this

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Speaker 4: is the right way forward, not just from an emission's

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Speaker 4: point of view, but that it will actually be profitable

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Speaker 4: for shareholders as well, so that's kind of at the

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Speaker 4: heart of his pitch to them. And whenever we talk

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Speaker 4: about energy, climate, some of these major topics that literally

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Speaker 4: power the nation, we have to hear from the government.

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Speaker 2: Did we hear from them yesterday?

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Speaker 4: We did, So I suppose there's two different types of

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Speaker 4: government voices that we can look to here, So there's

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Speaker 4: the government itself the politicians, but there's also the government regulator,

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Speaker 4: so I might start there. So the government regulator is independent,

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Speaker 4: it doesn't answer to the politicians, and it's called in

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Speaker 4: this case AEMO, the Australian Energy Market Operator, and they

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Speaker 4: say that Australia should be able to do away with

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Speaker 4: coal altogether by twenty forty three, so that they've mapped

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Speaker 4: out a path to make that happen. And Mike cannon

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Speaker 4: Brooks's statements in the media have said that he sees

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Speaker 4: his move as kind of part of emo's plan to

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Speaker 4: make that happen. It's fair to say that the government

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Speaker 4: is known for being quite cautious when it comes to

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Speaker 4: the removal of coal plants. So we heard yesterday from

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Speaker 4: Energy Minister Angus Taylor and he said it, as he

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Speaker 4: said many times before. He basically warned about the reliability

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Speaker 4: issues and the price issues that he's concerned could come

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Speaker 4: from being too hasty with exiting coal, So he I

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Speaker 4: suppose poured a little bit of coal water on the

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Speaker 4: idea from that perspective, and definitely, I think the impact

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Speaker 4: on jobs, on power prices, and on system reliability they're

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Speaker 4: issues that certainly Mike Canonbrooks thinks he can overcome, but

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Speaker 4: they're the sorts of issues that have traditionally motivated the

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Speaker 4: government in this space, and so we can expect them

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Speaker 4: to be kind of watching any proposal closely with those

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Speaker 4: things in mind. And the idea of a billionaire taking

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Speaker 4: over a coal company to shut it down or more accurately,

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Speaker 4: to make it a renewable company sounds like a pretty

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Speaker 4: novel idea. Have we seen anything like it around the world.

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Speaker 3: So not quite.

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Speaker 4: We haven't really seen anything like this pulled off before,

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Speaker 4: but we have seen some similar things floated. So in

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Speaker 4: twenty fourteen, green Peace tried to buy a bunch of

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Speaker 4: coal mines from a Swedish energy company that and Fall,

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Speaker 4: So thatat and Fall was apologized for. I'm sure I'm

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Speaker 4: butchering the Swedish pronunciation there, but that they're a state

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Speaker 4: owned Swedish company that decided basically to exit coal and

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Speaker 4: to sell its mines, and Greenpeace said, we will buy

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Speaker 4: the mines and we'll shut them and we'll keep the

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Speaker 4: coal in the ground. But that bid was ultimately rejected.

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Speaker 4: And then more recently, the Asian Development Bank in November

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Speaker 4: last year has said that it would fund public private

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Speaker 4: partnerships to buy out coal plants in Indonesia and the

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Speaker 4: Philippines to speed up their closure. So that's in its

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Speaker 4: early stages, but that's a live plan. But certainly, if

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Speaker 4: canon Brooks were to succeed, and to succeed soon, he'd

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Speaker 4: be among the first in the world to do something

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Speaker 4: like this. But no doubt it may be that if

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Speaker 4: it works out, that others will follow. I think it's

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Speaker 4: certainly something that many will be watching very closely.

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Speaker 2: Tom, Thanks for that update. We'll keep an eye on

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Speaker 2: things and let everybody know. If there's a return bid

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Speaker 2: from Mike canon Brooks for a hundred trillion dollars, that

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Speaker 2: will be an offer that's hard to refuse. If you've

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Speaker 2: enjoyed this podcast, we would love you to review it

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Speaker 2: either on Apple or Spotify. Really makes a difference to

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Speaker 2: us as independent podcast producers. That's all we've got time

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Speaker 2: for today. On Tuesday the twenty second, have a fantastic

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Speaker 2: day and we'll speak to you tomorrow