Brickworks sells another 2 million shares in investment bank Washington H. Soul Pattinson and Company Limited (ASX: SOL) following the sale of 5.9 million shares on Friday.
In the announcement dated 3 December 2018, Brickworks Limited (ASX: BKW) announced that it has sold 2 million shares more in WHSP for the net proceeds of $39 million. The sale consideration reflects the stock price of $26.22 per SOL share, last traded on-market price on Friday, 30 November 2018.
With effect from this sale, the holding of Brickworks has reduced to 94.3 million shares in WHSP, however it continues to be the substantial holder of WHSP having 39.4% voting rights in the company, reduced from 42.71% interest.
Moreover, this sale comes in line with Friday’s announcement when the company first sold its 5.9 million shares in WHSP at an average price of $26.42 per share, generating net proceeds of approximately $115 million.
Robert Webster, Chairman of Brickworks’ Independent Board Committee which oversees Brickworks’ WHSP shareholding in line with Brickworks’ stated that transaction is executed to generate maximum value to Brickworks shareholders. He added that the transaction has derived benefits on the back of high demand of WHSP shares after its inclusion in MSCI index.
Brickworks intends to utilize the proceeds of sale to reduce its net debt following its recent acquisition of US based brick manufacturer Glen-Gery. It translates the binding agreement that Brickworks has entered into to acquire Glen-Grey, 4th largest brick manufacturer of the US, for US$110 million.
Glen-Gery holds a leading market position in key north east states and has sold Circa 230 million US bricks for the twelve months to August 2018. Its normalized EBITDA for the same period was AU$18 million and revenue of AU$162 million. Following Glen-Gery acquisition, Brickworks expects access to large market with favourable demand drivers and accretion in underlying EPS in year one.
However, due to wet weather conditions and tougher credit regulations leading to project delays, the company has reported marginally lower revenue in the first quarter of FY2019. In the Annual General Meeting presentation, the company said that its building products earnings were materially lower in the first quarter, due to the impact of the lower revenue and significantly higher energy prices.
For fiscal year 2019, the company expects its first half year earnings to be in line with FY2018. Further, it expects that increase in property earnings and the contribution from Glen-Gery will offset any decline in Building Products earnings in FY2019.
With this update, Brickworks share price edged up 3.613% or $0.590 to trade at $16.920 on 3 December 2018 (4:20 PM AEST). Moreover, the stock is currently trading at a PE of 13.900x with market capitalization of $2.44 billion. A decent change is seen in the stock performance of the company when looking at the past performance. Over the past one year, BKW share price has jumped 16.64% and in the past six months, it was up 5.02%.
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