AGL has refused Alinta Energy’s $250 million offer to buy Liddell Power Station and reaffirmed its decision to close the plant in 2022.
The power giant says it assessed the offer from Alinta and its Hong Kong-based owner, Chow Tai Fook Enterprises, and that the deal significantly undervalues future cashflow from the NSW site.
AGL said the offer is not in the interest of its shareholders and that it will stick to its NSW power generation plan, which includes repurposing the Liddell site to address any capacity shortfall after its closure in 2022.
The energy company last month announced it will spend up to $400 million to build a new gas-fired power station near Newcastle in NSW as part of a plan to help it address the loss in energy supply that could happen as a result of Liddell closing.
“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,” the company said in a statement on Monday.
Alinta made its bid for the ageing Hunter Valley power station in April, describing it as a “compelling commercial proposition for AGL shareholders”.
Treasurer Scott Morrison has previously urged AGL to accept the offer from Alinta to buy the plant, echoing calls from Prime Minister Malcolm Turnbull who wants the station to stay open until 2025, when the expansion of the Snowy Hydro scheme is online.
On Monday, former prime minister Tony Abbott said the Turnbull government should buy the power station and then on-sell it to Alinta Energy.
“My very strong view given that the federal government has effectively now got responsibility for energy security, the government should compulsorily acquire this power station for the price Alinta were prepared to pay and then it should sell it to Alinta,” he told 2GB radio.
AGL chief executive Andy Vesey has previously said the board had not been swayed by criticism from the prime minister and senior coalition figures because the decision to close the ageing power plant was based on a rigorous process.
Investors appeared to be pleased with the news, with AGL shares up 0.9 per cent higher to $21.48 after the first half-hour of trade.