Sigma Healthcare (ASX:SIG) announced a significant step forward in its proposed merger with Chemist Warehouse Group (CWG), following the Australian Competition and Consumer Commission’s decision not to oppose the deal. The approval comes with a court-enforceable undertaking from Sigma, ensuring competitive practices are maintained.
The merger, which involves Sigma acquiring CWG in exchange for shares and $700m in cash, represents a reverse acquisition where Chemist Warehouse shareholders will hold an 85.75% stake in the merged entity. Sigma CEO Vikesh Ramsunder welcomed the ACCC’s decision, calling it a “critical milestone” and highlighting the potential to form a leading ASX-listed healthcare company.
The ACCC’s investigation found that the merger is unlikely to substantially lessen competition due to the presence of other major wholesalers like API and EBOS. Chair Gina Cass-Gottlieb noted that alternative wholesalers and the ability of pharmacies to switch suppliers played a key role in the decision.
Sigma has provided an undertaking to ensure that pharmacies under long-term contracts can exit without undue cost and that their data is protected. The merged entity is also committed to fulfilling the Commonwealth Government’s Community Service Obligations for five years, ensuring continued supply of Pharmaceutical Benefits Scheme (PBS) medicines nationwide.
Shares are trading 32.65% higher at $2.58.