SOL +16.44%: was slow out of the gates but climbed through the day to close on its all-time high after announcing it would form a new company with Brickworks (BKW), ending cross-ownership between the firms, which has been in place for 56 years.
SOL shareholders to receive 1 new company share for each Soul Patts share owned.
- BKW shareholders to receive 0.82 new co shares for every 1 Brickworks share owned.
- The new entity has received commitments of $550 million via a capital raise as part of the deal.
The transaction will result in a combined private capital and building powerhouse worth ~$14bn. The two companies have collaborated extensively in the past, with the success of the deal ultimately coming down to how much more can be squeezed out in terms of further cost and earnings synergies.
Brickworks reported weak first-half revenue which hit the share price back in March after a tough macro backdrop for building and construction in the U.S. While the merger provides scale and size, as well as simplifying in the long-term, there’s potential for short-term noise until the strategic direction of the business is bedded down.
MM is neutral on SOL & BKW
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