Pharmacy Daily | Sigma targets pay, awaits ACCC findings

SIGMA has identified $60 million in potential cost synergies if the proposed merger with Chemist Warehouse (PD 07 Dec 2023) is executed, CEO Vikesh Ramsunder (pictured) said yesterday in a statement posted to the ASX.

Despite the rosy picture, 47.7% of proxy voting shareholders knocked back a remuneration proposal in the company's Annual General Meeting Report proposing to pay $1 million to Ramsunder.

The report also recommended a further $500,000 bonus to be paid next year if the merger goes ahead, a payment which would double to $1 million if it fails.

Ramsunder said proxy voters were not persuaded by the incentives put in place by the board to secure his retention.

"Considering the share price is up 100%, we secured the supply contract with Chemist Warehouse and there was the merger - there was a lot that happened for Sigma, but proxy advisers did not appreciate the retention put in place given the merger," he told media after the AGM.

The company report also explained that the ACCC has undertaken market enquiries regarding the proposed merger, and has identified 13 Jun this year as the provisional date for the announcement of its findings, which may be a final decision or a statement of issues.

"Whilst timing remains unclear, we are hopeful of a positive decision in the second half of this year, which will then be followed by a shareholder approval process that is expected to take around three months," Ramsunder said.

He mentioned that if the merger is completed, "it has the potential to accelerate our strategic direction by bringing together two complementary businesses with complementary core strengths".

Sigma will also be launching over 250 private and exclusive label products this year, with approximately 80% of these expected to be introduced in the second half of the year.

In the medium term, the company plans to grow the Amcal network to 300 stores and Discount Drug Stores to 150 (PD 20 Sep 2023).

In Mar, Sigma announced its financial results and a summary showed net sales were $3.3 billion and excluding the merger proposal costs, earnings before interest and tax (EBIT) were $31.4 million and net profit after tax (NPAT) was $12.7 million (PD 22 Mar).

Including merger proposal costs, EBIT was $23.2 million and NPAT was $4.5 million, an increase of 150% on the prior year.

The improvement was supported by a 11% reduction in total operating costs, stated Sigma. JG