The combination will birth a new ASX-listed entity christened TopCo
Ashurst and King & Wood Mallesons (KWM) have confirmed their roles in the landmark $14bn proposed merger between building material manufacturer Brickworks and diversified investment house Washington H. Soul Pattinson and Company Limited (Soul Patts).
Ashurst guided Soul Patts, while KWM assisted Brickworks on the two separate and and inter-conditional schemes of arrangement transactions. The merger will birth TopCo. a newly capitalised top-hat entity that will list on the ASX.
Under the deal, TopCo initiated a $550m capital raise to finance the merger and bolster its future balance sheet, as per KWM. It will raise more capital as the implementation date approaches.
The combination is set to complete in September.
"The success of this deal sends two important signals. Current volatility aside, it is possible to find valuation common ground on scrip-for-scrip transactions. Also, capital markets are open and willing to support deals", KWM partner David Friedlander said.
Since 1969, Soul Patts and Brickworks have been in a cross-shareholding arrangement; at present, Soul Patts holds a 43% share in Brickworks while Brickworks has a 26% interest in Soul Patts. According to Ashurst, TopCo will absorb all the shares in both companies in consideration for TopCo Shares issued to holders of Soul Patts and Brickworks Shares in the following proportions: one TopCo share for every one Soul Patts share held as at the record date and 0.82 TopCo shares for every one Brickworks share held as at the record date.
TopCo's market capitalisation is expected to be $14bn. It is also anticipated to have a wide shareholder base, greater liquidity and a considerably expanded free float.
Once the scheme is completed, TopCo will be capitalised through the issuance of at least 34 million new shares. The entity has obtained commitments for $550m of TopCo shares at nil discount to SOL’s last close of $36.93, conditional on scheme implementation, Ashurst said.
Partner Bruce Macdonald led the Ashurst team on this transaction. He received support from partners Greg Golding, Andrew Kim, Con Tzerefos, and Patricia Paton (corporate transactions); partner Kate Phillips (projects and energy transition); partner Kate Barker (real estate); partner Anita Cade (IP/media); partner Rebecca Cope (digital economy transactions); partner Tihana Zuk (competition); partner Angie Ng (competition, Singapore); partners Emma de Carle, Jock O'Shea and Brenton Key (global loans); partners Costa Koutsis, Steve Whittington and Sanjay Wavde (tax); partner Tony Hill (planning, access and environment); partner Jennie Mansfield (employment); partner Jamie Ng (consulting); and partner Rani John (dispute resolution).
The KWM team, which advised Brickworks on all aspects of the transaction and the capital raising, included Friedlander and partners Judith Taylor, Robert Kelly and Dan Natale, as well as senior associates Jaspreet Nagra, Ned Sutton and Jim Zovaro.
Aitken Mount Capital Partners served as sole lead manager and fully underwrote the commitments for TopCo shares.
