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News & Trends - Pharmaceuticals

Largest pharmacy retailer ASX debut via wholesaler takeover sparks industry concerns

Health Industry Hub | December 8, 2023 |

Pharma News: Australia’s largest pharmacy retailer is gearing up for a significant move as it eyes a listing on the Australian Securities Exchange (ASX). Chemist Warehouse is making waves by taking a majority stake in the Australian wholesaler Sigma Healthcare, the owner of Amcal and Guardian pharmacies, in a reverse takeover.

Earlier this week, Sigma Healthcare called for a trading halt on its shares, teasing an impending announcement linked to a “potential material transaction” today. This strategic move by Sigma involved raising $350 million, aimed at increasing liquidity for the expanded business resulting from the merger.

At present, Chemist Warehouse boasts a valuation of approximately $5 billion, with annual sales soaring to $3 billion. The impending listing is poised to unlock the wealth of its founders, Jack Gance and Mario Verrocchi, whose substantial property holdings include multiple flagship Chemist Warehouse stores across the country.

Unexpectedly, the Pharmacy Guild of Australia was caught off guard by news of the Chemist Warehouse-Sigma reverse merger, leaked on Wednesday. Expressing concerns, the Guild cautioned that this impending takeover could potentially raise “significant questions and risks” related to patient care, community pharmacy ownership, and industry competition.

Similarly, the Australian Competition and Consumer Commission (ACCC) disclosed its lack of prior awareness about this substantial transaction.

“The ACCC has not been notified of this transaction. If the potential transaction progresses, the ACCC would consider if a public merger review into the impact on competition is required,” stated an ACCC representative.

While ACCC opposed Sigma’s merger with Australian Pharmaceutical Industries (API) due to concerns regarding the reduction of full-line pharmaceutical wholesalers from three to two, it did not obstruct Wesfarmers’ acquisition of Priceline in the past. Notably, the Pharmacy Guild publicly opposed a rival bid from Woolworths during a significant pharmacy deal on the ASX.

Key players involved in the Chemist Warehouse-Sigma transaction include David Di Pilla, CEO of HMC Capital, slated to join the board of the amalgamated entity. HMC Capital, managing a fund with a 19% stake in Sigma, has been instrumental in guiding the Chemist Warehouse owners towards their ASX listing. Both families are investors in HMC Capital’s ventures, marking a confluence of interests in this monumental deal.

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