Soul Patts and Brickworks Announce $9 Billion Merger, Shares Soar on Deal

Australian investment firm Washington H. Soul Pattinson (Soul Patts) and building materials giant Brickworks have announced a landmark A$14 billion ($9 billion) merger, sending both companies’ shares sharply higher on Monday.

As part of the deal, a new Sydney-listed entity will be created to acquire all outstanding shares in both companies. Soul Patts shares surged 13.78%, while Brickworks stock jumped 22.32% by early afternoon trading, reflecting strong investor confidence in the new corporate structure.

Simplifying a Complex Relationship

The merger will formally unwind a 56-year-old cross-shareholding arrangement, under which Soul Patts held a 43% stake in Brickworks, while Brickworks owned 26% of Soul Patts. The structure, originally implemented in 1969 to prevent hostile takeovers and foster long-term growth, had long been criticized for suppressing shareholder value and limiting transparency.

“Merging Soul Patts with Brickworks makes a lot of strategic and financial sense,” said Todd Barlow, CEO and Managing Director of Soul Patts. “It simplifies the structure, adds scale, and creates a more investable company.”

Key Deal Details

• A new entity will acquire all shares of Soul Patts and Brickworks

• The combined company will have holdings across real estate, private equity, and credit, totaling A$13.1 billion

• Brickworks shareholders will receive an implied value of A$30.28 per share, a 10.1% premium over Friday’s closing price

• Pitt Capital Partners is advising Soul Patts

• Citigroup Global Markets Australia is advising Brickworks

Long-Awaited Move After Years of Pressure

The merger comes after several failed efforts to unwind the longstanding cross-ownership, including a high-profile push from Perpetual Investment Management and investor Mark Carnegie between 2012 and 2017. That campaign ended when the Federal Court ruled the structure did not harm shareholders.

“The structure was odd,” noted Hugh Dive, Chief Investment Officer at Atlas Funds. “It was set up in 1969 as a share swap between two companies with similar market caps to protect against each other being taken over.”

Dive added that his firm had historically avoided investing in both companies due to the complexity of the cross-shareholdings, which led them to trade at a discount compared to their peers.

Investor Reaction Positive

While the merger may not be a game-changer for Australia’s broader M&A landscape, market response has been strongly positive.

“The investors clearly like it,” Dive said, pointing to the sharp increase in share prices following the announcement.

With the deal simplifying governance and unlocking value, the merged entity is expected to be more attractive to institutional investors and analysts alike.