WHSP Holdings Limited

ASX:SOL

WHSP Holdings Limited

ASX:SOL
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$36.24 (-1.1%)
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#40
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16
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Reports (4) My Report Forum Investors
Forum Topics SOL SOL #merger

Pinned straw:
wonkeydonkey
Added 6 months ago

This wasn't on my bingo card....


Investment house Soul Patts is set to merge with Brickworks, forming a $14 billion ASX-listed investments, private capital, property and building products giant, Street Talk understands.


Sources said stockbroker Aitken Mount Capital Partners pitched a $500 million equity raising to fund managers over the weekend as the foundation of the merger.

Perpetual is understood to have put its name forward for a significant minority of the funding, which sources said could be done at a nil discount to Soul Patt’s share price. L1 Capital, Ausbil Investment Management, and Cooper Investors are also expected to contribute.

Soul Patts, formerly Washington H. Soul Pattinson, is a diversified investment manager with stakes in New Hope Group, TPG Telecom and Ironbark Asset Management, among other things. Brickworks is one of Australia’s biggest brick making groups with a history stretching back to 1934.

Soul Patts owns a 43.3 per cent stake in building products group Brickworks valued at $2 billion. Brickworks owns 26 per cent of Soul Patts, worth $3.5 billion. The merger will see the end of a 60-year-old cross-shareholding, first negotiated at Eastwood Rugby Club in Sydney’s north-west to achieve diversification and protect both firms from hostile takeovers.
Bushmanpat
Added 6 months ago

A merger makes sense, and as a holder of both in RL, I'm happy with the proposal on the face of it.

A big pop in both share prices today (and probably another small one post merger when the indices rebalance) means the market is happy in the short term, but I think it'll be a good move in the long run as well.

35
Strawman
Added 6 months ago

I’m in the "makes sense" camp too -- unwinding the cross-holdings and bringing it all under one roof feels like a logical endgame, especially with the Millners calling the shots on both sides. Folding the two together removes a major complexity factor (it was a tough structure to fully understand) and should enhance transparency, liquidity, and index weight — all of which matter a lot more in today's world of passive flows and institutional mandates.

45
BigStrawbs70
Added 6 months ago

All, as usual, very good points @Strawman

In particular, the index weight wasn’t the first thing that came to mind this morning, but that certainly is a big deal. If we assume, as announced, that the combined entity will be worth $14 billion, it would place the new company at #26 on the ASX - just $700M outside the top 25 (well, that is what ChatGTP tells me).

Maybe I’m overthinking it, but the relatively recent introduction of the dividend reinvestment plan seems to be part of a bigger strategy to generate even more free cash flow for Uncle Rob and his trusted management team to deploy. I’ve loved this company for many years, and my ‘bro crush’ (or Company Crush?) is only growing.

30
thunderhead
Added 6 months ago

The market seems to be in violent agreement. I didn't expect a 25+% pop in BKW, which I hold both on Strawman and IRL (though sadly, not quite enough of it!).

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Solvetheriddle
Added 6 months ago

Yippe it's good when your thesis works out! the first clue to this was the SOL merger with Milton a couple of years ago. That showed SOL was in the mindset of significant corporate change. I thought they were waiting for Lindsay Partridge to retire to buy out BKW, so I started getting disheartened as time went by after he retired. Having said that, I think BKW as a standalone is worth mid-$30s due to the property portfolio, but also the cross-shareholdings make it complicated. so probably fair enough on first blush.

as an aside, i wonder what Mat Williams at Airlie thinks about this, as you recall he took them to court to force a demerger, rumour is he lost his job over it when head of PPT equities, funny how the wheel turns.

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BigStrawbs70
Added 6 months ago

Good details of this on the Soul Patts website. https://yourir.info/resources/4b1a443a62bafee4/announcements/sol.asx/2A1599425/SOL_Investor_Presentation_Merger_of_Soul_Patts_and_Brickworks.pdf

I didn’t see this coming either, but I’m also not that surprised… if that makes any sense.

With the cross-ownership between the two companies plus the shared Chair (Rob Millner) and the Millner family’s controlling interest in both companies, it was probably only a matter of time. Is it a good thing? My gut says yes. I’ve got full confidence in Uncle Rob and Todd Barlow, and if the Milton merger (aka takeover) is anything to go by, these guys know how to get maximum value from these mergers - not their first time.

Still, it does feel like the end of an era.

DISC: Soul Patts makes up around 20% of my IRL portfolio, so I’m definitely biased.

27
thunderhead
Added 6 months ago

I was close to adding another parcel of Brickworks. Not unhappy with the pop though!

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