Australia's Soul Patts to take over Brickworks in $9 billion merger
The deal streamlines the two companies' complex cross-ownership of each other that has been in place for nearly 60 years and has long been criticised by corporate governance experts in Australia.
Brickworks shareholders will receive 0.82 shares in the new firm with an implied value of A$30.28 per share, a 10.1% premium to the stock's closing share price on Friday, valuing the building products maker at A$4.62 billion ($3 billion).
Its shares were 17.7% higher in early trade on Monday at A$32.37, while Soul Patts stock gained 9.2%.
Brickworks was set for its biggest single day rise since September 2009 and was the top gainer on the ASX200 (.AXJO), opens new tab index, which was down 0.1%.
Soul Patts would own 72% of the new company. Holders of Brickworks would own 19%, while the remainder would be offered to new shareholders. Soul Patts investors will receive one share in the new company for each of their existing shares.
Soul Patts has a 43% shareholding in Brickworks, and Brickworks owns 26% of Soul Patts. With the deal, Soul Patts' free float will increase from A$8.4 billion to A$12.6 billion, Chief Executive Todd Barlow told an investor briefing Monday.
The new entity has received commitments worth A$550 million in shares, fully underwritten by Aitken Mount Capital.
A shareholder vote to approve the deal is due to be held later this year.
($1 = 1.5499 Australian dollars)
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