Chemist Warehouse is merging with its supplier in a deal that will create an ASX-listed retail giant with a market value estimated at $8.8 billion.
Sigma Healthcare will pay $700 million in cash and enough stock so that the private pharmacy chain's shareholders own 85.75 percent of the merged group, Sigma announced Monday.
The deal could be seen as a backdoor deal for Chemist Warehouse Group, a 600-store chain founded by the Gance and Verrocchi families in Melbourne about 50 years ago.
Chemist Warehouse will merge with pharmacy giant Sigma Healthcare to create a pharmacy and healthcare giant. Sigma says this will mean more brand choice and products for customers
With an estimated market capitalization of $8.8 billion, the combined company would be among Australia's 100 largest and easily qualify for the ASX200.
Sigma Chairman Michael Sammells called the merger a step-change for his company, unlocking efficiencies, synergies and growth opportunities.
“The combined group will have extensive capabilities and expertise that franchisees and customers can benefit from, including greater brand choice, products and services and expanded marketing capabilities,” he said.
Jack Gance, chairman of the Chemist Warehouse Group, said the deal would combine Chemist Warehouse's retail and marketing capabilities with Sigma's state-of-the-art distribution infrastructure and logistics capabilities.
CWG founders Mario Verrocchi, Mr Gance and Sam Gance have agreed to an escrow arrangement for their combined stake of approximately 49 percent in Chemist Warehouse Group.