Convertible Noteholders Brace as Soul Patts-Brickworks Merger Triggers Delisting and Control Shift

• Binding Combination Deed executed for merger creating TopCo
• New ASX-listed company with $14 billion market capitalization
• Soul Patts' $450 million convertible notes impacted by Change of Control
• Delisting of existing shares expected post-merger
• TopCo leadership to include executives from both companies

A Transformative Union

Washington H. Soul Pattinson and Company Limited (Soul Patts) and Brickworks Limited have taken a decisive step towards consolidation by executing a binding Combination Deed to merge their businesses. This merger will establish a newly capitalised ASX-listed company, referred to as TopCo, with an estimated market capitalization of $14 billion. The move is designed to simplify the longstanding cross-shareholding structure between the two firms, enhance liquidity, and broaden diversification for shareholders.

Financial and Structural Implications

The merger will be implemented through inter-conditional schemes of arrangement, subject to shareholder and court approvals anticipated in the second half of 2025. A significant feature of the transaction is the issuance of new TopCo shares, which will be used to address Brickworks' outstanding debt, including Soul Patts’ $450 million senior unsecured convertible notes due in 2030, as well as other liabilities and transaction costs. This restructuring is expected to result in a simplified and well-capitalised balance sheet for the combined entity.

Importantly, the merger triggers a Change of Control event under the terms of Soul Patts’ convertible notes, which may entitle noteholders to exercise conversion rights or require redemption. Additionally, the existing shares of both companies are expected to be delisted upon implementation, marking a significant transition for investors.

Leadership and Governance

TopCo will be led by Todd Barlow, currently CEO and Managing Director of Soul Patts, with a board comprising directors from both companies, including Robert Millner AO as Non-Executive Chair. The merger has received unanimous recommendation from both boards, with independent directors overseeing the process to ensure the transaction serves the best interests of all shareholders.

Shareholder Benefits and Market Position

Shareholders of both Soul Patts and Brickworks stand to benefit from increased scale, diversification, and financial flexibility. Soul Patts shareholders will gain greater exposure to Brickworks’ building products and industrial property assets, while Brickworks shareholders will access Soul Patts’ diversified investment portfolio spanning private equity, credit, listed equities, and property. The merger is expected to deliver net asset value and cash flow accretion on a per-share basis for both groups.

TopCo will also pursue a buy-back arrangement for certain shares, supported by a $550 million placement underwritten by Aitken Mount Capital Partners, further underpinning the capital structure. The transaction includes comprehensive provisions addressing regulatory approvals, tax rollover relief, and employee share rights.

Next Steps and Outlook

The merger timetable is indicative, with key milestones including shareholder meetings, court hearings, and scheme implementation targeted for the latter half of 2025. Both companies have committed to keeping the market informed of material developments. Investors should watch closely for shareholder vote outcomes and regulatory clearances that will determine the merger’s finalisation.

Bottom Line?

As the merger progresses, convertible noteholders and shareholders alike will be watching closely for how this new entity reshapes the investment landscape on the ASX.

Questions in the middle?

• How will convertible noteholders respond to the Change of Control and potential redemption rights?
• What impact will the delisting and re-listing have on liquidity and share price volatility?
• Could alternative proposals emerge before shareholder and court approvals are secured?