Pharmacy Daily | Sigma’s share price rally

SIGMA Healthcare Limited's share price has surged this week, reaching $2.06, up from $1.46 seven days ago.

This sharp rise reflects growing market confidence in Sigma's handling of its proposed acquisition of Chemist Warehouse, with the court-enforceable undertaking offered to the Australian Competition and Consumer Commission (ACCC) (PD 01 Oct).

The ACCC's concerns centre around potential market dominance and the misuse of confidential pharmacy data, which could harm competition.

In response, Sigma's undertaking includes allowing franchisees to terminate agreements without penalty for three years and limiting the use of sensitive data during that period, as well as staying within the Community Service Obligation for five years.

While the ACCC is seeking public feedback on this latest move by the wholesaler, market sentiment around the acquisition has strengthened as evidenced in the stock price rally.

Retail expert and CEO of Retail Doctor Group Brian Walker described it as "a vote of confidence by the market in Sigma's approach".

"Their undertaking has clearly alleviated fears around competition and data use, boosting investor confidence in the company's future," he told Pharmacy Daily.

The proposed acquisition, which effectively results in a reverse takeover, will see Chemist Warehouse shareholders owning 85.75% of the merged entity.

Walker commented, "this merger could grow Sigma's and Chemist Warehouse's share of the retail market considerably, solidifying their dominance".

He also said as the ACCC continues its investigation, the market's positive reaction underscores the belief that Sigma's efforts to comply with competition regulations will ensure the deal's success. JG