Chemist Warehouse, Sigma get ACCC green light for $8.8 billion merger

Investing

Chemist Warehouse and Sigma Healthcare have been given the green light to form Australia’s largest pharmacy chain, with ACCC approval clearing the path for the $8.8 billion merger.
Chemist Warehouse and Sigma together will operate over 1,000 retail stores and 16 distribution centres. Image: Getty
Key Takeaways
  • The ACCC approved the merger after months of review and concessions from Sigma.
  • Chemist Warehouse and Sigma together will operate over 1,000 retail stores and 16 distribution centres.
  • Sigma Healthcare owns pharmacy brands including Amcal, Guardian, PharmaSave and Discount Drug Store.
  • Chemist Warehouse shareholders will hold an 85.75% stake in the merged ASX-listed entity.
  • Chemist Warehouse and Sigma’s shareholders still need to sign off on any pending deal.
Big Number

$8.8 billion – The total value of the Chemist Warehouse and Sigma merger, creating the largest pharmacy network in Australia.

Crucial Quote

“There is and will continue to be effective competition at all levels of the pharmacy supply chain,” said ACCC Chair Gina Cass-Gottlieb.

“The ACCC’s analysis found that the proposed merger is unlikely to substantially lessen competition nationally or locally because other pharmacies and non-pharmacy retailers will continue to compete to the same extent they compete now.”

Key Background

After several months of scrutiny, the ACCC approved the $8.8 billion merger between Chemist Warehouse and Sigma Healthcare, despite initial concerns about reduced competition. The merger will combine Chemist Warehouse’s retail reach with Sigma’s extensive distribution network, creating a dominant presence in the pharmacy sector with over 1,000 stores and 16 distribution centres in Australia and New Zealand.

The ACCC had flagged potential issues, particularly regarding Sigma’s role as a major supplier to independent pharmacies. Concerns included whether the merged entity might leverage its increased market power to limit supply options for smaller pharmacies, potentially driving up prices. In response, Sigma committed to a series of legally binding conditions, addressing these competition concerns.

Surprising Fact

The merger will see Chemist Warehouse take a commanding 85.75% share of the new ASX-listed entity, while Sigma shareholders retain 14.25%.

What to Watch For

Pending shareholder and Federal Court approval, the merger paves the way for a Chemist Warehouse listing on the ASX, marking a new growth phase for the pharmacy giant.

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