Brickworks Shareholders Gain 10% Premium in $14 Billion Soul Patts Merger
Washington H. Soul Pattinson and Brickworks Limited have agreed to merge, creating a $14 billion ASX-listed entity that promises greater scale, liquidity, and diversification for shareholders.
- Binding Combination Deed executed for merger
- Newly capitalised ASX-listed company with $14 billion market cap
- Brickworks shareholders receive 10.1% premium on shares
- Simplification of cross-shareholding and balance sheet strengthening
- Todd Barlow appointed CEO of merged entity, TopCo
A Strategic Union
In a landmark move for the Australian market, Washington H. Soul Pattinson and Company Limited (Soul Patts) and Brickworks Limited have formalised a binding agreement to merge, creating a newly capitalised ASX-listed company with an anticipated market capitalisation of approximately $14 billion. This merger is designed to simplify a decades-old cross-shareholding structure, enhance scale, and broaden the investment appeal of the combined entity.
The merger will be executed through two inter-conditional schemes of arrangement, subject to shareholder and regulatory approvals. Both boards have unanimously recommended the transaction, underscoring the strategic and financial rationale behind the union.
Unlocking Value and Diversification
For shareholders, the merger offers a compelling value proposition. Brickworks shareholders will receive an implied value of $30.28 per share, representing a premium of 10.1% to the closing price prior to the announcement. This premium extends to 21.9% over the three-month volume-weighted average price, reflecting the market’s recognition of the merger’s potential.
Shareholders of Soul Patts will gain increased exposure to Brickworks’ high-quality building products and industrial property assets, including its significant joint ventures with Goodman Group. Conversely, Brickworks shareholders will benefit from Soul Patts’ diversified portfolio spanning private equity, credit opportunities, and listed equities, providing cyclical protection and enhanced cash flow stability.
Financial Strength and Capital Structure
The newly formed entity, to be renamed Washington H. Soul Pattinson and Company Limited and trading under the ASX ticker SOL, will feature a simplified and well-capitalised balance sheet. The merger involves the cancellation of cross-held shares and the issuance of at least 34 million new shares to fund a significant portion of Brickworks’ outstanding debt, the Soul Patts convertible bond, and transaction costs.
TopCo has already secured commitments for $550 million in new shares, fully underwritten by Aitken Mount Capital Partners. This capital raising is a critical step in ensuring the merged company’s financial flexibility and capacity for future investments.
Leadership and Governance
Leadership continuity and governance are central to the merger’s success. Todd Barlow, current CEO and Managing Director of Soul Patts, will lead TopCo as CEO. The board will comprise eight members, including notable figures such as Robert Millner AO as Non-Executive Chair and directors drawn from both legacy companies, ensuring balanced representation and strategic oversight.
Governance arrangements have been carefully structured to maintain independence and protect shareholder interests, with cross-shareholdings excluded from voting on the schemes and independent expert opinions commissioned.
Next Steps and Market Implications
The merger remains subject to customary conditions precedent, including court and shareholder approvals, as well as regulatory clearances. An indicative timetable anticipates shareholder meetings and court hearings in the second half of 2025, with implementation expected thereafter.
Market participants will be watching closely as this merger promises to reshape the investment landscape for diversified industrials on the ASX, combining stable building products with a diversified investment house portfolio. The transaction’s success could set a precedent for future consolidation in the sector.
Bottom Line?
As Soul Patts and Brickworks move toward integration, investors should monitor shareholder approvals and regulatory milestones that will determine the merger’s ultimate success.
Questions in the middle?
- How will the merged entity balance its diversified investment portfolio with the operational demands of building products?
- What are the potential risks if key conditions precedent, such as shareholder or court approvals, are not met?
- How will the new capital structure impact the merged company’s ability to pursue future acquisitions or investments?
