ASX 200 jumps, Soul Patts rises, Openpay soars

There was a recovery for the ASX 200 today after yesterday’s decline.

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The S&P/ASX 200 Index (ASX: XJO) rose by 1.5% today to 7,342 points.

Here are some of the highlights from the ASX:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Milton Corporation Limited (ASX: MLT)

Soul Patts announced today that it’s going to merge with Milton through a scheme of arrangement. In other words, it’s going to acquire Milton.

Milton shareholders will be offered new Soul Patts shares as payment, with Milton shares to be valued at a 10% premium to the adjusted net tangible assets (NTA).

As part of the takeover, Milton shareholders will be entitled to the benefit of three fully franked dividends totalling 52 cents per share. Those dividends, if paid, will also come with 22 cents per share of franking credits.

The implied offer value from the ASX 200 share of $6 represents a 20% premium to the previous closing price on 22 June 2021 of $5.

Milton’s independent directors have unanimously recommended the deal.

Managing director of WHSP, Todd Barlow, said:

This is a transformative merger bringing together two of Australia’s great investment companies to create a $10 billion group with enhanced liquidity, diversification and access to a broad range of asset classes.

Milton shareholders are being offered script at a significant premium to both Milton’s share price and NTA, the potential benefits of three fully franked dividends, and exposure to WHSP’s diverse portfolio of assets which have historically delivered significant outperformance over the long term.

We look forward to progressing this merger with Milton, with the view of welcoming Milton’s management team and up to 30,000 new shareholders and the benefits this will bring to both companies.

The Soul Patts share price rose 0.8%, whilst the Milton share price went up 16%.

Openpay Group Ltd (ASX: OPY)

The Openpay share price increased 17% after announcing an acquisition.

It announced a deal that it called “highly material”. It’s going to acquire Payment Assist, a leading BNPL provider to the UK automotive sector in one of the largest acquisitions made by a BNPL outfit in the UK.

Openpay said that the transaction is an important stepping stone on Openpay’s path to becoming a leader in its chosen verticals including in the UK and the US. The acquisition, according to the company, provides further differentiation from peers in the “pay in 4” space and underscores Openpay’s focus on delivering its plans for particular industries.

On a 2020 calendar year basis, the pro-forma combined UK entity would have recorded almost triple the total transaction value (TTV), increasing from £43.6 million to £121.7 million. UK revenue would have also more than tripled from £2.4 million to £8.4 million, with high margins.

Michael Eidel, the managing director and CEO of Openpay, said:

In Payment Assist, we saw a unique opportunity to acquire a profitable, market-leading player in the £26.7 billion UK addressable automotive market. The proposed acquisition of this fast-growing business accelerates our automotive market entry and secures a significant foothold for Openpay in the UK. Material growth synergies exist between Openpay and Payment Assist. We also have shared values and a common vision to become the leading BNPS provider in our verticals globally.

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. 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.

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