Shares of the ASX-listed Sigma Healthcare (AU:SIG) surged 22% as of writing after Australia’s competition regulator gave the green light to its merger with Australia-based rival Chemist Warehouse. Sigma welcomed the decision by the ACCC (Australian Competition & Consumer Commission), describing it as an important milestone for the potential deal.
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After approval, Sigma shares soared to their highest level since 2007. Year-to-date, SIG stock has gained almost 140%.
ACCC Clears Sigma-Chemist Warehouse Merger
The ACCC cleared Sigma’s merger with Chemist Warehouse, stating that it would not reduce competition. It also believes that consumers would continue to have a wide range of options even if the merger proceeds. The ACCC came to this decision after a thorough review involving public consultation and close discussions with the parties.
Why the Sigma-Chemist Warehouse Deal Makes Sense
Sigma operates as a pharmacy wholesaler, supplying prescription medicines and over-the-counter items. Meanwhile, Chemist Warehouse functions as a pharmacy franchisor and distributor.
With this deal, Sigma aims to create a top ASX-listed healthcare company by combining its advanced pharmaceutical distribution with Chemist Warehouse’s retail expertise. Sigma believes that the proposed merger will strengthen the business, benefiting all stakeholders. Moreover, the merger is viewed as the most significant overhaul of Australia’s pharmacy sector in decades.
Following this approval, shareholders will now vote on the proposed transaction after another regulatory review.
Is Sigma Healthcare a Buy?
On TipRanks, SIG stock has been assigned a Hold rating based on two Hold, one Buy, and one Sell recommendation from analysts. The Sigma Healthcare share price target of AU$1.23 is 48.26% below the current trading level.
