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

Woman using laptop sitting in cloud cheering
Mergers & Acquisitions

Why is the PTB share price rocketing 35%?

The company's shares are flying today with a takeover offer on the table

Read more »

Rubbish and waste around a green recycling logo.
Earnings Results

Cleanaway share price halted amid results, $400m cap raise and acquisition

Let's analyse all the major news that has come out today.

Read more »

A female superhero dressed in shiny green with a mask leaps in the sky with leg and arm outstretched in a leaping action.
Mergers & Acquisitions

Genex share price leaps 8% on revised takeover bid from Atlassian founder

The new bid values the renewable energy company at more than $346 million.

Read more »

Four PointsBet customers and football fans put heads in hands and look disappointed while watching television
Technology Shares

Betmakers share price slips despite new $20 million deal

The betting technology provider has amended a key contract. Here are the details.

Read more »

One young boy jumps off a step ladder and is captured mid-air about to land on a seesaw where his friend is standing with a wide smile on his face looking at the camera and holding his thumbs up as though he is excited for the ride to come. Both young boys are wearing business suits.
Mergers & Acquisitions

Nearmap share price jumps 30% on takeover news

The Nearmap share price rallied 33% to $2.01 in early trade on Monday, but remains below the bid price.

Read more »

A frustrated young woman shopper holds her hands up with a pained, annoyed expression on her face as she stands next to her trolley in a grocery store and examines the stock offerings on the shelf in front of her.
Mergers & Acquisitions

Woolworths share price slides following MyDeal ACCC nod

MyDeal shareholders will vote on the proposed acquisition next month.

Read more »

A person with a round-mouthed expression clutches a device screen and looks shocked and surprised.
Consumer Staples & Discretionary Shares

iSelect share price explodes 75% on takeover news

The iSelect share price is sky high after the company revealed a takeover offer from the owner of www.comparethemarket.com.au.

Read more »

Two men in business attire play chess.
Resources Shares

OZ Minerals ‘completely in play’: Broker on BHP takeover bid

BHP's bid for OZ Minerals may not be over...

Read more »