Brickworks and Soul Patts shares rocket on $14b merger
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More news: Brickworks and Soul Patts were the two best performing ASX 200 stocks in early trading after the pair announced a proposed merger to form a new $14 billion company.
Brickworks shares were up 15.7% to $31.84 at 11am AEST. Soul Patts shares had climbed 8.5% to $40.07.
Under the terms of the proposed deal, Brickworks shareholders are set to receive $30.28 per share, a 10.1% premium to its last closing price of $27.51. Soul Patts shareholders will receive one share in the newly formed company for every share held.
Soul Patts and Brickworks agree to $14b merger
The news: Investment house Washington H Soul Pattinson and building products group Brickworks have announced a proposed merger to form a new $14 billion company.
The numbers: The proposed deal would see Brickworks shareholders receive an implied value of $30.28 per share, representing a 10.1% premium to its last closing share price.
Soul Patts shareholders will receive one share in the newly formed company, 'TopCo', for every Soul Patts share held. 0.82 TopCo shares will be issued for every Brickworks share.
Following a 56-year cross-shareholding, Soul Patts already owns a 43.3% stake in Brickworks, while Brickworks owns 26% of Soul Patts.
The context: In a joint release, Soul Patts and Brickworks said the merger would see the creation of a newly capitalised ASX-listed company, which would increase exposure for Soul Patts shareholders to Brickworks' building products and property assets.
TopCo will be renamed Washington H Soul Pattinson and Company Limited, with the ASX ticker SOL.
The companies said the deal is expected to deliver value creation and growth opportunities for both sets of shareholders through "significantly increased scale" and a simplified company structure by removing the cross-shareholding.
TopCo will also be capitalised with new equity, they said, to be used to cover a "significant proportion" of outstanding Brickworks debt, as well as other liabilities and transaction costs.
The two companies said TopCo has received commitments for $550 million of TopCo shares at nil discount to Soul Patts' last closing price of $36.93.
The directors of both Soul Patts and Brickworks have unanimously recommended the proposed merger.
What they said: "Merging Soul Patts with Brickworks makes a lot of strategic and financial sense," said Soul Patts CEO and managing director Todd Barlow.
"It simplifies the structure, adds scale, and creates a more investable company."
Brickworks CEO Mark Ellenor said: "Brickworks has undergone significant evolution over the past few decades, with the growth in value of its property assets and its building products portfolio.
"The time is now right to combine with Soul Patts, bring our portfolios under one investment company, and become a well-resources and more diversified group delivering long term value for our shareholders."
The source: ASX
