Here's why the Milton (ASX:MLT) share price has rallied 22% in a month.

Milton shares have posted outsized returns in the last month. Here are the details.

a happy child dressed in full business suit gives the thumbs up sign while sitting at a desk featuring a piggy bank and a sack of money with a dollar sign on it.

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

The Milton Corporation Ltd (ASX: MLT) share price has been a major winner on the ASX broad indices over the last few weeks.

Whereas the S&P/ASX 200 Index (ASX: XJO) has slipped 0.4% into the red over the last month, the investment company's shares have climbed 22%.

Let's investigate further.

What tailwinds are behind the Milton share price?

The major takeout weighing in on the Milton share price right now is the proposed merger with Washington H. Soul Pattinson & Company Ltd (ASX: SOL).

Back in June, the company announced it had entered into a scheme implementation agreement with Soul Pattinson with the latter proposing to acquire 100% of the outstanding Milton shares it does not already own.

Under the proposal, Milton shareholders will receive several incentives. Firstly, they will receive a "scrip consideration" that reflects a 10% premium to Milton's net tangible assets (NTA) pre-tax.

Next, they will receive a fully franked Milton special dividend of up to 37 cents per share, in addition to Milton's final dividend of 8 cents per share. Shareholders will also access a portion of Soul Pattinson's full franked FY21 dividend, estimated at 36 cents per share.

If the proposal is successfully voted through, Milton shareholders will own 33.8% of the new entity.

What's happened since?

On 3 September, the company announced that both entities had finalised the exchange ratio for the proposed merger.

Both parties agreed that Milton shareholders will receive 0.1863 Soul Pattinson shares for every Milton share owned, if approved.

This exchange ratio implied a total value of $7.18 per Milton share based on Soul Pattinson's share price of $35.76 at the timing of the release.

At the time, that value signified a 5.6% premium to the Milton share price. However, Milton shares are now exchanging hands at $7.38 apiece and Soul Pattinson shares are trading at $38.12.

As such, the economics of the exchange ratio now implies a total value of $7.62 per Milton share at Soul Pattinson's current share price. This represents a premium of 3.2% to the current Milton share price.

As a result, Milton's independent board has maintained its recommendation that shareholders vote in favour of the proposal. An independent expert has also concluded that the scheme is in the best interests of Milton shareholders.

What has management said?

Regarding the proposal, Committee of Independent Milton Directors' chair Graeme Crampton said:

The exchange ratio confirmed today demonstrates the implied value in the proposed transaction for Milton Shareholders and underscores the Independent Directors' recommendation. We continue to recommend that shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of Milton Shareholders.

Milton share price snapshot

The Milton share price has climbed 54% this year to date, extending the previous 12 months' return of 80%.

Both of these results have outpaced the broad index's return of around 25% over the past year.

Should you invest $1,000 in Resolute Mining Limited right now?

Before you buy Resolute Mining Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Resolute Mining Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

The author Zach Bristow has no positions 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 Share Gainers

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Dimerix, Evolution Mining, Inghams, and NextDC shares are charging higher today

These shares are rising when many are falling today. But why?

Read more »

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a rough trading day for ASX stocks this Monday.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why 4DMedical, Gold Road, Syrah, and Tyro shares are racing higher today

These shares are starting the week strongly. But why?

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

2 ASX gold stocks racing higher in Monday's sinking market

Investors are sending these ASX gold stocks flying higher on Monday. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords share just rocketed 19% on BIG news

Investors are sending this ASX All Ords share flying on Monday. But why?

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why Boss Energy, Capstone, Dimerix, and Platinum shares are storming higher today

These shares are having a good finish to the week. Let's find out why.

Read more »