Sigma Healthcare is expected to announce a major transaction today, which will result in a backdoor listing by the privately-owned pharmacy giant, Chemist Warehouse, on the Australian stock exchange.
Sigma Healthcare shares entered a trading halt just before 1 pm as news of the anticipated deal spread through the market. Sigma shares were halted at 76 cents, marking a 2.68% increase for the truncated session.
At this level, Sigma was valued at $810 million by investors.
The deal would involve Chemist Warehouse acquiring majority control of Sigma, which, in addition to owning the Amcal brand, operates a substantial pharmaceutical distribution business.
Analysts suggest that the ACCC may require the sale of the Amcal chain of pharmacies and potentially some parts of the pharmaceutical distribution business.
Additionally, Sigma is expected to undertake a new capital raising effort aimed at supporting the significantly different business structure of Chemist Warehouse.
Chemist Warehouse has been actively working towards an ASX listing for most of this year, with its founding families seeking expansion opportunities.
Founded in Melbourne in 2000 by Jack Gance and Mario Verrocchi, Chemist Warehouse has evolved into one of Australia's most recognisable retail brands. The chain operates both franchised and company-owned stores, similar to fast-food businesses like McDonald's and KFC.
According to accounts filed by the private company with the corporate regulator, Chemist Warehouse recorded revenue in excess of $3 billion for the year ending June 30.
In June, Sigma successfully regained a supply contract with Chemist Warehouse that it had lost in 2018. The wholesale pharmaceuticals contract was previously held by its larger rival, Symbion, which is owned by the New Zealand-based EBOS. The new contract is set to commence on July 1, 2024.
The Financial Review reported on Wednesday that "HMC Capital, which manages listed and unlisted investment vehicles focusing on property and consumables, has been assisting Chemist Warehouse with its plans, including considering a potential ASX listing via a reverse listing through Sigma." "It owns a 13.5% stake in Sigma, and the Gance and Verrocchi families are investors in its vehicles."