Australian drug supplier Sigma Healthcare has announced its agreement to merge with privately owned pharmacy operator CW Group, resulting in the formation of a listed company valued at more than AUD 8.8 billion. Under the deal, Sigma will pay AUD 700 million in cash and issue sufficient new shares to allow CW Group to own 86% of the combined entity. The remaining ownership will be retained by Sigma shareholders, who currently hold a market capitalization of AUD 810.4 million.
To finance the merger, Sigma plans to raise AUD 400 million in equity through a fully underwritten entitlement offer. The coming together of the two companies will create a combined healthcare wholesaler, distributor, and retail pharmacy franchiser. This move will position the newly formed company among the top 50 entities listed on the Australian benchmark S&P/ASX 200 index.
Both Sigma and CW Group anticipate achieving approximately AUD 60 million in annual cost savings within four years following the completion of the merger. As the operator of Australia’s renowned Chemist Warehouse pharmacy chain, CW Group operates approximately 600 stores across the country.