Merger at Risk? Soul Patts’ Convertible Notes Repurchase Hinges on Scheme Approval
Washington H. Soul Pattinson and Brickworks announce a conditional $14 million Topco share placement and a concurrent repurchase of up to $450 million in convertible notes, key steps in their proposed merger.
- Conditional forward placement of 14 million Topco shares with UBS AG
- Soul Patts to repurchase up to 100% of $450 million convertible notes due 2030
- Repurchase price and volume determined via reverse bookbuilding process
- Share placement contingent on merger scheme approval
- Jefferies appointed as Sole Dealer Manager for convertible notes repurchase
Merger Progression Through Capital Moves
Washington H. Soul Pattinson and Company Limited (Soul Patts) and Brickworks Limited have taken significant steps to advance their proposed merger by announcing a conditional forward share placement and a concurrent repurchase of convertible notes. These moves are designed to streamline the capital structure of the newly formed entity, Topco, and lay the groundwork for the merger's successful implementation.
The conditional placement involves UBS AG, Australia Branch, agreeing to purchase 14 million Topco shares. This transaction is contingent upon the approval and effectiveness of the merger schemes outlined in the Combination Deed announced earlier in June 2025. If approved, the shares will be issued before the merger's implementation, contributing to Topco's capitalisation as previously disclosed.
Convertible Notes Repurchase Details
Simultaneously, Soul Patts is conducting a reverse bookbuilding process to repurchase up to 100% of its outstanding $450 million Senior Unsecured Convertible Notes due 2030. The reverse bookbuilding will determine both the number of notes repurchased and the price, providing flexibility to optimize the capital structure ahead of the merger. Jefferies (Australia) Pty Ltd has been appointed as the Sole Dealer Manager to oversee this process.
This repurchase initiative signals Soul Patts’ intent to reduce debt and potentially lower interest expenses, which could improve financial stability and investor confidence in the merged entity. The process also includes delta hedging activities coordinated by Jefferies, which may result in substantial exposure to Soul Patts by the dealer manager or its affiliates.
Strategic Implications and Next Steps
Both Soul Patts and Brickworks have long histories as established ASX-listed companies, with Soul Patts evolving from a pharmacy operator into a diversified investment house, and Brickworks standing as Australia’s largest brick manufacturer with a strong property portfolio. Their merger aims to combine complementary assets and create a more diversified and capitalized investment vehicle.
The conditional nature of the share placement means that the merger's fate still hinges on shareholder and regulatory approvals. Should the placement not proceed, a cash adjustment mechanism is in place to balance any price differences, ensuring fairness to all parties involved.
Investors will be watching closely as the reverse bookbuilding process unfolds and as the merger schemes move toward approval. These capital restructuring steps are critical to setting the financial foundation for the combined company’s future growth and stability.
Bottom Line?
As Soul Patts and Brickworks navigate these complex capital moves, the market awaits the merger’s final approval and the impact on the new entity’s financial health.
Questions in the middle?
- What will be the final repurchase price and volume of the convertible notes after the reverse bookbuilding?
- How will the conditional share placement affect Topco’s valuation and shareholder composition?
- What are the potential risks if the merger schemes fail to gain approval?
