Two of Australia’s best-known investors will go head to head after Mark Carnegie launched a $1 billion proposal to break up one of the last remaining cross-shareholding arrangements on the ASX between Brickworks and Pattinson

James Thomson Editor

BRW Rich List veteran Robert Millner facing attack on Brickworks-Soul Patts tie-up

Published 24 October 2013 08:46, Updated 25 October 2013 07:04


Robert Millner is unlikely to give in to pressure from Mark Carnegie and Matt Williams to break up the cross shareholding between Soul Patts and Brickworks. Photo: Rob Homer

Two of Australia’s best-known investors will go head to head in the coming months after Mark Carnegie launched a $1 billion proposal to break up one of the last remaining cross-shareholding arrangements on the ASX between Washington H Soul Pattinson and Brickworks. The proposal will see Carnegie and his brother in arms in this fight, Perpetual fund manager Matt Williams, take on a man who is investment royalty in Australia, Robert Millner.The Millners are veterans of BRW’s Rich Families list, on which they werevalued at $810 million. They have long defended the cross shareholding as protecting the two companies from the vagaries of economic cycles and hostile takeovers.

They family is unlikely to budge this time, setting up for a big showdown.

“I come in peace, but I’m prepared for war,’’ Carnegie said on Wednesday.

The proposal, which shareholders in both companies will be asked to vote on at special meetings, would see Brickworks’ 43 per cent stake in Soul Patts cancelled in return for about $250 million in cash and around $1.6 billion in promissory notes.

That would leave Brickworks as a brick maker and Soul Patts as the investment company it is today – minus the cross shareholding, which Carnegie and Williams claim is preventing Soul Patts from shining as it should.

In an interview with The Australian Financial Review , Williams gave the following example of how Soul Patts’ best investments in listed companies haven’t flowed through to its own share price.

“The New Hope investment has gone up 1000 per cent in 10 years, Soul Pattinson is 200 per cent, TPG is up 2000 per cent in the five years – Soul Pattinson has not kept pace with these investments,” Williams said.

As an extra wrinkle to the Carnegie-Williams proposal, they want Soul Patts to consider handing its 27 per cent stake in TPG Telecom back to shareholders.

Millner resistance likely

The Millner camp is yet to react to the proposal, but going on past form, Robert Millner is almost certain to resist it.

But if he is hoping to use the cross shareholding to vote down the proposal to cancel Brickworks’ stake in Soul Patts, he might be in a spot of bother. Carnegie has legal advice that says Soul Patts and its related parties in Brickworks – including the Millner family itself – should not be allowed to vote at all.

Millner may well challenge that legal advice, too.

Carnegie’s is a complex proposal and there appears to be plenty of uncertainty surrounding the potential tax implications for shareholders.

Nonetheless, Matt Williams has guaranteed Soul Patts shares will rise if the cross shareholder is unwound.

“I will guarantee you and I’ll guarantee other independent shareholders if these proposals are all voted through and voted through the Soul Pattinson meeting as well, I guarantee you the share price will be a lot higher than it is today,” said Williams. “If you are a Brickworks independent shareholder, and you are a Brickworks independent director – what is not to like?

“You’re going to get potentially $22 of value per share for the Soul Pattinson shares you own. No deal has been put to the independent shareholders like this before.”

Winners all around

Shares in Brickworks and Soul Patts climbed to 12-month highs yesterday; Soul Patts was up 3.8 per cent to $14.95 while Brickworks was up 4.5 per cent to $14.60.

If Williams is right, the Millner family, with its 8 per cent shareholder in Soul Patts, would actually be big winners from the demerger.

Just don’t expect them to be celebrating that fact any time soon.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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