Brickworks Shareholders Gain 10% Premium in $14B Soul Patts Merger

A Landmark Merger in Australian Investment

In a significant development for the Australian financial landscape, Washington H. Soul Pattinson (Soul Patts) and Brickworks have agreed to merge, forming a new ASX-listed company with a pro forma market capitalisation of approximately $14 billion. This merger, executed through inter-conditional Schemes of Arrangement, aims to streamline the corporate structure and unlock substantial shareholder value.

Simplifying Ownership and Enhancing Liquidity

One of the merger’s key features is the elimination of the existing cross-shareholding between Soul Patts and Brickworks, which currently involves around 148 million shares. By removing this complexity, the new entity, referred to as TopCo, will significantly increase the free float to $12.6 billion, thereby improving liquidity and making the company more attractive to a broader range of investors.

Financial Upside for Shareholders

Brickworks shareholders stand to benefit from a compelling premium on their shares, receiving 0.82 TopCo shares for every Brickworks share held. This translates to an implied value of $30.28 per Brickworks share, representing a 10.1% premium to the last closing price and an even higher premium when compared to one- and three-month volume-weighted average prices. Meanwhile, Soul Patts shareholders will receive one TopCo share for each Soul Patts share, with the merger expected to generate net asset value accretion and improved cash flow on a per-share basis for both groups.

Governance and Capital Structure

TopCo will be governed by a unified board of eight directors, including key figures such as Rob Millner AO as Chair and Todd Barlow leading the management team. The company will be capitalised with new equity, at least 34 million shares worth approximately $1.25 billion based on recent share prices, to address Brickworks’ outstanding debt, Soul Patts’ convertible bonds, and transaction costs. This strong balance sheet positions the merged entity to pursue growth and new investment opportunities with confidence.

A Diversified Portfolio and Strategic Outlook

The combined portfolio of TopCo will be well diversified across multiple asset classes, including property, private equity, credit, and emerging companies, with a net asset value of $13.1 billion. This diversification is expected to provide cyclical protection and stable cash flows, while the merger also capitalises on structural tailwinds such as e-commerce growth and housing supply constraints. Both companies have a long history of consistent dividend payments, which the new entity intends to maintain, offering ongoing income stability to shareholders.

Next Steps and Market Implications

The merger is unanimously recommended by the boards of both companies, subject to shareholder approval, regulatory clearances, and customary conditions. Scheme booklets and shareholder meetings are anticipated in the second half of 2025. Investors will be watching closely as this merger reshapes the investment landscape, potentially setting a new benchmark for conglomerate structures on the ASX.