News: AGL UPDATE 1-Australia's AGL Energy backs company split, against billionaire

(Adds company, Cannon-Brookes comments, share price)

AGL Energy (AGL) on Tuesday stood by its plan to split into two companies a day after tech billionaire and climate activist Mike Cannon-Brookes swooped on an 11.28% stake in Australia's biggest power producer with the aim of stopping the demerger.

Cannon-Brookes, in a letter released on Monday, called AGL's plan to split into an energy retailer and coal-fired power generator "flawed" and said he would vote his shares against the demerger.

In its first response to the letter, the company maintained it was in the best interest of its shareholders to go ahead with its proposal. It plans to put the proposal to a shareholder vote in mid-June with the aim of completing the split by the end of June.

The board said the proposed demerger would create "the potential to maximise growth in the value of shares by giving each company the freedom to pursue individual strategies and growth initiatives".

Cannon-Brookes, whose stake in the company was worth around A$650 million ($459 million), said in his letter to the board that he expected the total value of the two companies would be "worth less than where AGL trades today".

He will need support from the owners of a further 14% of the company to be able to block the split, which requires approval from 75% of votes cast to go ahead.

AGL's shares fell 1.3% in early trade on Tuesday, underperforming a 0.4% fall in the broader market.

($1 = 1.4156 Australian dollars)