June 24, 2025 | Industrials | Asia | Active
On 2-Jun-25, Australian investment firm Washington H. Soul Pattinson (“Soul Patts”) announced that it had entered into a binding combination deed with building products affiliate Brickworks to create a new holding company. Under the deal terms, Brickworks shareholders will receive 0.82 Soul Patts shares for each Brickworks share. This values Brickworks at AUD 30.28 per share and represents a 10.1% one-day premium and a 16.6% premium to the target’s post-tax net asset value (NAV). The deal has been unanimously recommended by the Soul Patts board and the independent directors of Brickworks, subject to the absence of a superior proposal and a fairness opinion from an independent expert. The merger will unwind a complex and long-criticised cross-shareholding structure dating back to 1969, under which Soul Patts currently owns 43% of Brickworks and Brickworks holds 26% of Soul Patts. The Millner family, who control substantial stakes in both firms, is expected to hold 7-8% of the combined entity. Upon completion, Soul Patts shareholders will own 72% of TopCo (pro forma Soul Patts), Brickworks shareholders 19%, and new investors 9% (those who will participate in a Soul Patts equity raise to take place upon deal completion). At closing, TopCo will adopt the name Washington H. Soul Pattinson and Company, and will continue trading under the ticker “SOL AU”. Todd Barlow, the current Soul Patts CEO, will lead the combined entity, while Brickworks’ CEO Mark Ellenor will remain and focus on operational integration. The transaction is structured as two inter-conditional schemes of arrangement and requires approval from both sets of shareholders, court sanction, and regulatory clearance. A separate headcount test applies, but the combination deed outlines that if the scheme resolution passes a 75% vote threshold, but fails the headcount test due to “inappropriate or improper conduct” or “reasonable grounds”, the company can seek court intervention to waive the test. In line with governance best practices, both companies have committed not to vote their own shares in the other’s scheme. Tax treatment is a closing condition where the deal requires confirmation from the Australian Taxation Office (ATO) that Australian resident shareholders will be eligible for scrip-for-scrip rollover relief. The agreement includes a MAC that allows either party to terminate if Brickworks’ net assets fall by more than AUD 210m or Soul Patts’ by more than AUD 960m. It also includes a “market disruption event” clause triggered if Soul Patts’ 10-day VWAP falls below an agreed NAV range. The scheme booklet is ...
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