D-Day looms for Sigma-Chemist Warehouse merger

Expectations are that Chemist Warehouse and Sigma will be worth more than $30bn once the backdoor listing deal is finalised because of the support from passive index funds. Picture: NewsWire/Tertius Pickard

There will be plenty of market jitters on Thursday when Chemist Warehouse and Sigma’s merger comes into being and franchisees of the retail pharmacy giant can sell their shares.

The question is just how many head for the door and what sort of impact there will be on the stock.

For many, much of their wealth is tied up in Chemist Warehouse, and they will be keen to liquidate sooner rather than later.

The big unknown factor is what the fallout will be on its share price.

Balancing that out, index funds will need to buy in because of the scale of the new merged company.

Expectations are that Chemist Warehouse and Sigma will be worth more than $30bn once the backdoor listing deal is finalised because of the support from passive index funds.

Individual pharmacy owners that have gained stock and are allowed to sell account for a large portion of shareholders.

About 200 people potentially including other members of the Gance and Verrocchi founding Chemist Warehouse families have about $11.5bn worth of shares, but the stakes held by the founders are subject to escrow arrangements.

Sigma announced the deal with the privately held Chemist Warehouse, effectively a reverse takeover, last year and subsequently gained approval from the Australian Competition & Consumer Commission.

Jack and Sam Gance and Mario Verrocchi are set to hold about 49 per cent of the combined entity’s shares, which will be subject to escrow conditions, and other non-escrowed Chemist Warehouse shareholders will have almost 37 per cent.

David Di Pilla’s HMC has been a major holder in Sigma with a 7 per cent stake and was instrumental in getting a backdoor listing of Chemist Warehouse into its pharmacy rival.