The owner of Life and Unichem pharmacies is confident it can compete against an aggressively expanding Chemist Warehouse discount chain. Video / NZ Herald
Chemist Warehouse will merge with a big Australian company and create a new entity worth almost $10 billion under a proposed deal.
Melbourne-based Sigma Healthcare today said it wanted to merge with the aggressive pharmaceutical retailer.
But the deal will need to win approval from watchdogs including the Overseas InvestmentOffice.
Chemist Warehouse has hundreds of stores across Australia and New Zealand, with an estimated 600 in Australia alone.
Sigma Healthcare’s retail brands include Amcal+ and it also has aged care services.
Sigma aims to seal the deal with $752m cash and Sigma shares.
All Black Dan Carter effectively became the face of Chemist Warehouse in New Zealand when a 2020 deal was inked. Picture / Babiche Martens
It said it was also raising A$400 million (NZ$429m) to provide the increased working capital required to implement the Chemist Warehouse supply contract.
A brash newcomer, Chemist Warehouse (CWG) is not shy about its ambitions, declaring on its website: “Our great savings on products are due to aggressive pricing and larger volumes of trade.”
CWG shareholders will hold 85.75 per cent and Sigma shareholders 14.25 per cent of the merged group.
Sigma today told investors the proposed merger will unleash NZ$64m of savings a year.
The new behemoth would have a market capitalisation estimated at NZ$9.45b.
Chemist Warehouse stores have proliferated across Australia and New Zealand.
But regulators from Australia’s competition watchdog will have to approve the merger first, as will shareholders.
“The combination of Sigma and CWG is a transformational and compelling transaction for both companies,” Sigma said today.
It said the merger would create a full-service wholesaler, distributor and retail pharmacy franchisor.
The new entity would combine Sigma’s sophisticated distribution network with CWG’s retailing nous, Sigma added.
“The proposed merger is a step-change event for Sigma,” Sigma Chairman Michael Sammells said.
“With Sigma having had a commercial relationship with CWG and its founders spanning more than 40 years, we are excited by the efficiencies, synergies and growth opportunities that we anticipate being unlocked through the merger of the two complementary businesses.
“We look forward to building the next chapter of CWG’s success for the benefit of our customers, staff, franchisees and shareholders,” CWG Chairman Jack Gance said.
