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Massive Merger Between Soul Patts and Brickworks Reshapes Australia’s Corporate Landscape

In a landmark move for Australian corporate history, two of the country's most iconic firms — Washington H. Soul Pattinson (Soul Patts) and Brickworks — have announced a long-anticipated A$14 billion ($9.3 billion USD) merger. The announcement sent their stocks soaring on Monday, with Soul Patts surging 13.78% and Brickworks jumping a dramatic 22.32% by early afternoon on the ASX.

The newly combined entity will be listed on the Australian Securities Exchange and will consolidate assets across multiple sectors, including real estate, private equity, credit, and listed equities, with a combined portfolio valued at A$13.1 billion.

Strategic Rationale: Unlocking Value Through Simplification

The deal, described by Soul Patts CEO Todd Barlow as a “strategic and financial evolution,” marks the end of a 56-year cross-shareholding structure that had long drawn criticism for its complexity. “This merger simplifies the corporate structure, increases scale, and makes the combined company more appealing and transparent for investors,” Barlow said in a statement.

Previously, Soul Patts held a 43% stake in Brickworks, while Brickworks owned 26% of Soul Patts—a structure originally intended to defend against hostile takeovers and promote long-term investment stability. However, over the years, critics argued that the interlinked ownership created governance opacity and undervalued shares relative to peers.

Shareholder Gains and Deal Structure

Under the merger terms, all outstanding shares of both companies will be acquired by a new Sydney-listed entity. Brickworks shareholders will receive an implied value of A$30.28 per share, representing a 10.1% premium to the stock’s last closing price. Soul Patts shareholders will also benefit from the uplift in perceived value through the combined company’s scale and clearer governance.

Pitt Capital Partners is advising Soul Patts on the transaction, while Citigroup Global Markets Australia is representing Brickworks.

A Decades-Old Structure Finally Unwound

This isn’t the first time efforts were made to dismantle the entangled ownership between Soul Patts and Brickworks. Between 2012 and 2017, a concerted campaign led by Perpetual Investment Management and venture capitalist Mark Carnegie pushed for reform, arguing that the structure suppressed shareholder value. However, the Federal Court sided with management, stating the cross-holding wasn’t detrimental to shareholders.

“It was a quirky setup from 1969 — a share swap between two companies with roughly equal market caps, designed to shield them from hostile takeovers,” said Hugh Dive, CIO at Atlas Funds Management. “But the downside was always the discount. Both stocks consistently traded below intrinsic value due to the perceived complexity.”

Dive noted that while the transaction may not be transformative for Australia’s M&A scene in terms of deal size, it is “highly significant in terms of governance and corporate clarity. Investors clearly support the move.”

Broader Implications for Corporate Australia

The merger also highlights a broader shift in Australian corporate governance — one where simplified, investor-friendly structures are increasingly being prioritized. “As we see more global capital flowing into Australia, clarity and transparency become critical,” said one market analyst. “This deal is a sign that legacy structures are finally being modernized.”

Industry observers suggest the move may inspire other conglomerates or family-run holding companies in Australia to reassess legacy governance frameworks and prioritize unlocking shareholder value.

Looking Ahead

With a streamlined structure and a diversified asset portfolio, the new Soul Patts-Brickworks entity is expected to appeal to institutional and retail investors alike. The firm’s reach across cyclical sectors like construction, as well as more stable investments in private equity and credit, offers balanced exposure.

Investors will be watching closely as integration begins — particularly for synergy realization, revaluation of previously discounted shares, and potential reweighting of the new entity in major indices.

Conclusion:
This merger marks not just the end of an era for two storied Australian firms but the beginning of a new chapter — one that reflects modern corporate governance, scale-driven investment strategy, and a renewed focus on shareholder value.