Soul Pattinson share price rises after electric deal for Ampcontrol

The investing house is in the green after buying up an electrical engineering business.

| More on:
A silhouette shot of two business man shake hands in a boardroom setting with light coming from full length glass windows beyond them.

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

Key points

  • The Soul Pattinson share price is up in early trade after the company reportedly buys the rest of Ampcontrol
  • Ampcontrol is Australia’s largest privately-owned electrical engineering business
  • The business reportedly generated $44.9 million of EBITDA in FY21

The share price of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is edging into the green in early trading today amid news of an acquisition.

The forward movement comes despite the NASDAQ 100 Index (NASDAQ: NDX) falling overnight. The S&P/ASX 200 Index (ASX: XJO) has also started off today with difficulty.

Soul Pattinson's latest acquisition

The ASX share owns a diversified portfolio of listed businesses and private businesses.

One of Soul Pattinson's holdings is the business Ampcontrol.

Ampcontrol says that it delivers integrated electrical, electronic, and control solutions to improve safety and efficiency in mining, renewables, infrastructure, and industrial applications. Soul Pattinson notes that Ampcontrol's mining sector presence is "strong" with products and services.

At the end of the first half of FY22, Soul Pattinson owned a 42.9% stake in Ampcontrol.

However, now Soul Pattinson has moved to buy all of Australia's largest privately-owned electrical engineering business, according to the Australian Financial Review.

The newspaper reports that Soul Pattinson has paid to buy the entire business on an enterprise value basis of around $200 million. The other shareholders were reported to be the founders of the business – Keith Grant, Peter Cockbain, Tony Studdert, and Neville Sawyer.

How much revenue and profit does Ampcontrol generate? The AFR noted that, in FY21, the business generated $256.5 million of revenue and $44.9 million of earnings before interest, tax, depreciation and amortisation (EBITDA).

It was also reported that Ampcontrol was a possible contender to list with the help of Bell Potter and Morgans, but it wasn't able to make a listing happen.

How big of a deal is this?

A $200 million valuation may sound like a lot of money but on the ASX that would only count as a small cap company. Soul Pattinson's market capitalisation is more than $9.5 billion at the time of writing.

At the end of the ASX share's FY22 first half, its total portfolio value was $9 billion after the merger with the listed investment company (LIC) Milton Corporation. A $200 million valuation is, therefore, a small percentage of the overall portfolio.

However, at 31 January 2022, Soul Pattinson's private equity portfolio was worth $650 million. So, Ampcontrol's value will be a sizeable part of Soul Pattinson's private business portfolio.

In the half-year result, the ASX share noted that it has "ample liquidity available for new investments due to a strong working capital position."

Soul Pattinson share price snapshot

Since the start of 2022, the Soul Pattinson share price has dropped by more than 10%.

It's down almost 13% in the past 12 months.

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns 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

Projection of two hands being shaken on a deal.
Materials Shares

Sayona Mining shares sink 13% on Piedmont Lithium merger news and capital raise

This merger will create the largest lithium producer in North America.

Read more »

Miner looking at a tablet.
Materials Shares

Down 28% in 2024, why this ASX 200 lithium stock could now be 'deeply undervalued'

The ASX 200 lithium stock has drawn plenty of investor attention over the past month.

Read more »

Woman looking at her tablet at a warehouse.
Mergers & Acquisitions

ASX 200 stock slides on huge $13 billion buyout news

ASX 200 investors are mulling over the $13 billion merger implications on Wednesday.

Read more »

Rocket powering up and symbolising a rising share price.
Mergers & Acquisitions

Guess which ASX microcap stock just rocketed 67% on takeover news

Investors are sending the ASX microcap stock flying amid a takeover bid.

Read more »

A group of business people pump the air and cheer.
Mergers & Acquisitions

This ASX small-cap stock is exploding 75% on takeover news!

The takeover premium is large.

Read more »

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

Guess which ASX stock just rocketed 40% on takeover news

A colossal company finds value in the small end of our ASX town.

Read more »

Data Centre Technology
Mergers & Acquisitions

ASX 200 stock nabs $400 million data centre amid AI rush

Another way to invest in the enablers of artificial intelligence is being built.

Read more »

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »