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Sigma Healthcare Confirms $8.8b Chemist Warehouse Merger

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By Published On: December 11, 20230 Comments

Healthcare giant Sigma Healthcare has confirmed its plans to acquire Chemist Warehouse and list the merged pharmaceutical companies on the ASX. 

Speculation emerged last week that pharmacy giant Chemist Warehouse was on track for a reverse takeover that would land it an ASX listing.

Sigma Healthcare Limited confirmed these plans in an announcement released on Monday stating that the healthcare giant intends to acquire Chemist Warehouse and create a publicly listed company on the ASX with an expected market capitalisation $8.8 billion.

Chemist Warehouse founders Jack Gance and Mario Verrocchi will join the combined group’s board. Once the deal is completed, Chemist Warehouse shareholders are to hold 85.75 percent and Sigma shareholders to hold 14.25 percent of the merged company.

Jack Gance said, “the combination of Chemist Warehouse Group’s retailing and marketing capabilities and Sigma’s state-of-the-art distribution infrastructure and logistics capabilities presents unique opportunities for both Chemist Warehouse and Sigma shareholders.

The announcement revealed that in FY23, Chemist warehouse made over $7.9 billion in sales with a revenue of $3.1 billion. Sigma Healthcare reportedly remains on track to achieve reaffirmed full year FY24 EBIT guidance of $26 million – $31 million.

Sigma made the following case for the merger in a presentation posted to the ASX, stating that this transaction will result in:

  • The creation of a full-service wholesaler, distributor and retail pharmacy franchise.
  • Combines Sigma’s extensive and state-of-the-art distribution infrastructure with CWG’s leading retailing know-how.
  • Aggregate annual historical MergeCo EBIT >$495m1 , before synergies.
  • Significant potential for synergies – c.$60m p.a. of cost synergies expected.
  • Highly experienced management team and Board Greater scale, investor interest and balance sheet strength – indicative MergeCo market capitalisation >$8.8bn3 and expected to be eligible to sit well within the S&P/ASX200 following quarterly re-balancing.

The merger first needs to receive approval from the Australian Consumer and Competition Commission and New Zealand’s Overseas Investment Office before the transaction can be confirmed and then voted on by shareholders. The Pharmacy Guild of Australia has already expressed their concern over the apparent imminent takeover. The guild believes this takeover poses significant questions and risks related to patient care, community pharmacy ownership, competition, and the future of CSO wholesaling.

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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