Soul Patts (ASX:SOL) share price climbs higher on Milton merger

The investment company is set to get a lot bigger…

| More on:
Two business people shaking hands in an office

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

The Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) share price has finished the day in the green, up 0.83% to $30.50.

Today's upwards momentum and above-average trading volume follows news the investment company will merge with Milton Corporation Ltd (ASX: MLT).

Soul Patts and Milton merger

Two long-standing investment companies are set to merge into one. According to the release, Soul Patts and Milton has entered into a binding scheme implementation agreement which will see the bigger Soul Patts buy all the Milton shares it doesn't own.

There are a lot of similarities between the two investment houses that make the deal complementary. Both have stood the test of time – Soul Patts operating for more 118 years, while Milton is a little more youthful at 83 years.

Furthermore, both companies have a long track record of dividend-orientated investments. Funnily enough, both companies are big shareholders of each other.

However, there are some differences that the merger will look to take advantage of. This includes Milton's exposure to global equities, which Soul Patts is currently underweight in.

The agreement will see Soul Pattinson pay an equivalent offer value of $6 per Milton share. As expected, the Soul Patts merger has pushed the Milton share price up — it ended the day 16% higher at $5.80.

Soul Patts share buyback, in a way

The offer to Milton shareholders in a way will act as share buyback for Soul Pattinson. Currently Milton is Soul Patts' fourth biggest shareholder with around 9.17 million shares.

If the scheme is approved, those shares worth roughly $277.5 million will flow back under the Soul Pattinson banner.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions

a man attending a sporting match looks down at his phone with his hand over his eyes in dismay as though his sporting bet has failed.
Mergers & Acquisitions

Betr shares sink 8% after Pointsbet rejects 'unrealistic' takeover offer

The sports betting company has rejected an offer from its rival.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock is up 50% on takeover offer

A takeover offer is getting investors excited this morning. Let's dig deeper into things.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Santos shares rocket on $30b takeover offer

This energy giant could be going private after receiving a takeover approach.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which ASX 300 share just received a takeover offer

This share is jumping today after receiving a takeover offer.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Mergers & Acquisitions

Johns Lyng Group shares enter trading halt. Is it a takeover target?

This ASX 200 stock looks ripe for a takeover.

Read more »

Group of people in a gym high five each other surrounded by gym equipment.
Mergers & Acquisitions

This ASX tech stock is hitting a record high on acquisition news

The market is responding positively to this news. Let's dig deeper into it.

Read more »

Two people shaking hands in the boardroom on a merger.
Mergers & Acquisitions

What did Macquarie make of the Brickworks and Soul Patts merger?

Macquarie sees simplification, scale, and upside… but it also has a warning..

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Mergers & Acquisitions

PointsBet share price surges 11% on improved takeover offer

The bidding war for PointsBet shares continues apace today.

Read more »