AGL has rejected a sweetened takeover bid from a consortium led by Australian billionaire Mike Cannon-Brookes and will run with its own demerger and decarbonisation plans.
Mr Cannon-Brookes used Twitter on Sunday night to announce it would not proceed with plans to buy Australia's biggest electricity generator and largest emitter.
"The Brookfield-Grok consortium looking to take private & transform AGL is putting our pens down - with great sadness," he tweeted.
The consortium had lifted its offer to $8.25 per share, worth about $9 billion plus debt, from an initial unsolicited bid of $7.50 in late February.
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The target's board confirmed on Monday the increased offer was still not in the best interests of shareholders.
Chair Peter Botten said the revised offer was still well below fair value of the company, given the gains expected to be generated by AGL's demerger plans that will split the company in two by 30 June.
Both firms will pursue their commitment to "responsibly decarbonise without impacting energy reliability and affordability", Mr Botten said.
"It will allow each business to be valued separately and more positively by the market on the basis of their own specific fundamentals."
The two listed entities - green energy retailer AGL Australia and coal-fired electricity generator Accel Energy - have emissions reductions targets for net-zero emissions in 2040 and 2047 respectively.
Australasian Centre for Corporate Responsibility spokesman Dan Gocher said shareholders should be sceptical of the board's plans.
"The board of AGL has overseen a catastrophic decline in the share price of more than 70 per cent since its highs in 2017," he said.
After surging above $7.90 last month on CEO Graeme Hunt's view that the opening bid should be boosted by 30 per cent, AGL shares were trading lower by almost one per cent at $7.36 as at Monday 1130 AEDT.
David Ritter, CEO of Greenpeace Australia Pacific, accused AGL of having an "ideological obsession with coal" at the cost of the environment and its shareholders.
"AGL has chosen to hide the company's climate pollution behind a tokenistic and value-destructive dodgy demerger," he said.
The Brookfield and Grok Venture consortium had planned to take the company private, close coal-fired plants this decade and use $20 billion in capital on developing renewable energy and battery storage.
Mr Cannon-Brookes said the demerger plan was "a terrible outcome for shareholders, taxpayers, customers, Australia and the planet we all share".
