By Stuart Condie
SYDNEY–Australian drug provider Sigma Healthcare agreed to merge with privately owned pharmacy operator CW Group, making a listed firm price greater than 8.8 billion Australian {dollars} (US$5.79 billion).
Sigma on Monday mentioned it might pay A$700 million in money and subject adequate new shares for CW Group, the operator of Australia’s outstanding Chemist Warehouse pharmacy chain, to personal 86% of the mixed firm. Shareholders of Sigma, which has a market capitalization of A$810.4 million, would personal the rest.
Sigma secured a brand new A$1 billion debt facility to fund the money element of the deal and to refinance CW Group’s present debt. It additionally plans to boost A$400 million in fairness by way of a completely underwritten entitlement provide.
The merger will create a mixed healthcare wholesaler, distributor and retail pharmacy franchiser, Sigma mentioned. The firm could be one of many 50 largest corporations on Australian’s benchmark S&P/ASX 200 index.
The corporations anticipate to comprehend about A$60 million in annual value financial savings inside 4 years of the merger. CW Group operates about 600 shops, principally beneath the Chemist Warehouse model.
“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,” Sigma Chairman Michael Sammells mentioned.
Sammells will chair the mixed entity, with Sigma Chief Executive Vikesh Ramsunder changing into CEO. CW Group co-founder and Chief Executive Mario Verrocchi will proceed to guide the pharmacy enterprise and can develop into an government director.
CW Group co-founder Jack Gance will even be on the board.
Sigma shareholders HMC Capital and HMC Capital Partners Fund will help the merger, which is topic to approval by Australia’s competitors watchdog.
Write to Stuart Condie at stuart.condie@wsj.com
Source web site: www.marketwatch.com
