The proposed merger was announced today via a scheme of arrangement in exchange for Sigma shares and $700m cash consideration.

Chemist Warehouse Group (CWG) shareholders would hold 85.75% and Sigma shareholders 14.25% of the merged group upon completion of the proposed merger.

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.

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 initially estimated at around $60m per annum, expected to be released four years post-completion.

The indicative merged group market capitalisation is expected to be $8.8bn and 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 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 on Fri expressed its concerns about the proposed merger.

More details in today's issue of Pharmacy Daily.