THE proposed merger between Sigma Healthcare and Chemist Warehouse Group (CWG) has been officially outed with a Merger Implementation Agreement (MIA) from Sigma posted via the ASX this morning, detailing its aim to create a leading healthcare wholesaler, distributor and retail pharmacy with CWG (PD 07 Dec).
The ASX stated CWG shareholders will hold 85.75% and Sigma shareholders 14.25% of the merged group upon completion of the merger. (PD breaking news).
Sigma has also simultaneously announced a pro-rata accelerated non-renounceable entitlement offer fully underwritten by Goldman Sachs Australia to raise gross proceeds of approximately $400m to fund increased capital required to implement the new Chemist Warehouse supply contract commencing on 01 Jul 2024 and progress business growth initiatives (PD 06 Jun).
In the event the proposed merger proceeds to completion, and to the extent the proceeds have not been applied to fund working capital needs and new business initiatives discussed in the investor presentation published on the ASX this morning, some of the net proceeds from the entitlement offer may instead be used to partially fund the cash consideration payable under the proposed merger.
Sigma stated that the proposed merger has the potential to unlock significant efficiencies, with the cost synergies estimated at around $60m per annum, expected to be released four years post-completion.
The indicative market capitalisation is expected to be $8.8bn and to be eligible to sit well within the S&P/ASX200 following quarterly re-balancing.
The proposed merger is subject to a number of conditions including Australian Competition and Consumer Commission (ACCC) approval, CWG shareholder approval of the Scheme by 75% of the votes cast and by a majority under the headcount test and Sigma shareholder approvals by ordinary and special resolutions.
The Pharmacy Guild of Australia stated it believed the imminent proposed reverse takeover of Sigma Healthcare by Chemist Warehouse poses significant questions and risks (PD 08 Dec).
These questions and risks relate to patient care, community pharmacy ownership, competition, and the future of CSO wholesaling which Commonwealth, State and Territory Govts together with regulators, like the ACCC, need to urgently consider and address, the Guild commented.
The proposed merger entity called MergeCo will see Michael Sammells as the Chair and Vikesh Ramsunder as the Chief Executive Officer and Managing Director. JG
The above article was sent to subscribers in Pharmacy Daily's issue from 11 Dec 23
To see the full newsletter, see the embedded issue below or CLICK HERE to download Pharmacy Daily from 11 Dec 23
