Australian power generation company AGL Energy has abandoned plans to demerge its coal-fired power generation business, yielding to pressure from top shareholder Mike Cannon-Brookes.

In a statement, the company said that although its board continues to believe that the demerger was the ‘best way forward’, this option is no longer thought to be available.

AGL Energy said: “AGL Energy believes that the demerger proposal would have been supported by a majority of shareholders, both retail and institutional, many of whom are long term holders of AGL Energy shares.

“However, having regard to anticipated voter turnout and stated opposition from a small number of investors, including Grok Ventures, AGL Energy believes the demerger proposal will not receive sufficient support to meet the 75% approval threshold for a scheme of arrangement.”

Grok Ventures is the private investment vehicle of Mike Cannon-Brookes, the co-founder of Atlassian. The billionaire investor holds an 11.3% share in AGL Energy through Grok Ventures.

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Following the decision, AGL chairman Peter Botten and CEO Graeme Hunt have decided to resign from their positions. 

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.”

In addition, AGL announced that two other board members, Jacqueline Hey and Diane Smith-Gander, will also leave the company.

Botten added: “On behalf of the board, I would like to thank Jacqueline Hey, who is leaving the Board today, for her significant contribution to AGL Energy, including as Chair of the Safety, Customer and Corporate Responsibility Committee.”

Following the withdrawal of the demerger proposal, AGL’s board will review its strategic direction.

The board will also consider the analytical work created for the demerger proposal and will issue a detailed assessment of the strategic plans that were developed for AGL Australia and Accel Energy and their roles in the energy transition.