SYDNEY, AUSTRALIA: Sigma Healthcare Limited, a major Australian pharmaceutical wholesaler and pharmacy franchisor, has agreed to merge with CW Group Holdings, a leading retail pharmacy franchisor that operates under the Chemist Warehouse brand.
The merger will create a full-service healthcare wholesaler, distributor and retail pharmacy franchisor with a market capitalisation of over $8.8 billion.
Sigma Healthcare will acquire CWG Group through a scheme of arrangement, paying $700 million in cash and issuing Sigma shares to CWG shareholders, who will own 85.75% of the merged entity.
Sigma will also raise $400 million through an entitlement offer to fund the Chemist Warehouse supply contract and growth initiatives. The merger is expected to generate cost synergies of around $60 million per year, four years after completion.
Sigma Chairman Michael Sammells said: “The Proposed Merger is a step-change event for Sigma. 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.
The combined group will have extensive capabilities and expertise to benefit franchisees and customers, including through more brand choice, products and services and expanded marketing capabilities.”
CWG Chairman Jack Gance said: “The combination of CWG’s retailing and marketing capabilities and Sigma’s state-of-the-art distribution infrastructure and logistics capabilities presents a unique opportunity for both CWG and Sigma shareholders. We look forward to building the next chapter of CWG’s success for the benefit of our customers, staff, franchisees and shareholders.”
Under the terms, Sigma Healthcare has agreed to acquire 100% of the issued shares in CWG via a Scheme.