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Brickworks and Soul Pattinson of Australia secure funding for the $9.15 billion Topco Merger

Washington H. Soul Pattinson, an Australian investment company, and Brickworks, a building materials group from Australia said they had secured funding to merge their companies into a $9.15-billion ASX listed entity named Topco.

The company has secured additional funding of A$220,000,000 ($143.81 millions) at the same price as Soul Pattinson’s last closing price, A$42.61. The proceeds from the sale will be used to pay off Brickworks' outstanding debts and other liabilities.

Topco's debut is expected to be marked by a market cap of approximately A$14 billion (9.15 billion), supported by A$13.1 in diverse assets, including private equity, property and credit holdings.

Brickworks shareholders will receive 0.82 Topco shares at a value implied of A$30.28 per share, which values the building products manufacturer at A$4.62billion.

Mark Ellenor, CEO of Brickworks, said: "With equity in place, the combined company is ready to reap the benefits from the merger. We have a streamlined balance sheet, and a clear growth agenda."

Topco, in conjunction with the capital raising announced in June and in July, has received commitments to buy 34 million shares. This will generate approximately A$1.4 billion. In a statement released on Monday, Topco and the other companies confirmed that the merger was now fully funded. No further shares were required.

Corporate governance experts in Australia have long criticised the complex ownership structure of both companies, which has existed for more than 60 years.

Brickworks' outstanding loan debt was A$721m at the end of the half-year period ending January 31.

As of 0108 GMT shares in Soul Pattinson rose 0.6% while Brickworks remained largely flat. The benchmark index fell by a small 0.1%.

(source: Reuters)