Washington H. Soul Pattinson and Brickworks have announced a conditional placement of 14 million Topco shares and a concurrent repurchase of up to $450 million in convertible notes, setting the stage for their upcoming merger.
- Conditional placement of 14 million Topco shares with UBS AG
- Repurchase of up to 100% of $450 million Senior Unsecured Convertible Notes due 2030
- Placement contingent on approval of merger schemes between Soul Patts and Brickworks
- Reverse bookbuilding process to determine repurchase price and volume
- Jefferies appointed as Sole Dealer Manager for the convertible notes repurchase
Setting the Stage for a New ASX Entity
Washington H. Soul Pattinson and Brickworks have taken a significant step forward in their proposed merger by announcing a conditional forward share placement and a concurrent repurchase of convertible notes. This move is designed to underpin the capital structure of the newly formed ASX-listed company, referred to as Topco, which will emerge from the combination of the two long-established Australian companies.
The conditional placement involves 14 million Topco shares to be issued to UBS AG, Australia Branch. 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, these shares will be issued prior to the merger's implementation, providing essential capital to support the merged entity’s operations and growth plans.
Managing Debt Through Convertible Notes Repurchase
Alongside the share placement, Soul Patts is initiating a reverse bookbuilding process to repurchase up to 100% of its outstanding $450 million Senior Unsecured Convertible Notes due in 2030. This process allows noteholders to indicate their interest and price expectations for selling their notes back to Soul Patts. The final repurchase price and volume will be determined through this market-driven mechanism, offering flexibility and potentially reducing the merged group's debt burden.
Jefferies (Australia) Pty Ltd has been appointed as the Sole Dealer Manager to oversee this repurchase, coordinating delta hedging activities and managing any market exposure that may arise. This strategic debt management move aims to streamline the capital structure ahead of the merger, potentially enhancing financial stability and investor confidence.
Implications for Investors and the Market
The conditional placement and convertible notes repurchase are critical components of the merger’s financial architecture. By raising fresh equity capital and managing outstanding convertible debt, the combined entity seeks to position itself for long-term growth and shareholder value creation. Both Soul Patts and Brickworks bring diversified portfolios and strong track records, with Soul Patts evolving from pharmacy origins into a broad investment house, and Brickworks standing as Australia’s largest brick manufacturer with significant property and investment assets.
Investors should note that the placement is subject to scheme approval and market conditions, while the repurchase price and extent remain uncertain until the reverse bookbuilding concludes. These factors introduce some variability in the merged entity’s final capital structure and risk profile.
Looking Ahead
As the merger progresses, further details will be disclosed in the scheme booklets prepared by both companies. Market participants will be watching closely for the outcome of the scheme approvals and the convertible notes repurchase process, which will collectively shape the financial footing of the new Topco entity.
Bottom Line?
The conditional placement and convertible notes repurchase mark pivotal steps in the Soul Patts-Brickworks merger, with final outcomes set to influence the merged group's capital structure and market positioning.
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 placement impact the shareholding structure and valuation of the merged entity?
- What are the key risks if the merger schemes fail to gain approval or the placement does not proceed?