SIG - Sigma Healthcare

Country Lad said:

I need some clarification, so please tell me where I am wrong.

As I have said all along, I was confident that the merger would proceed.
However, I must be missing something because the part I just could not understand was the valuation per share after the merger.
The merged business is said to be worth around $7 billion which compares with EBOS which is about the same size with a market cap of $6.5 billion.

Let's say the value of the merged entity is a bit higher and worth $8 billion. After the merger there will be a total of 11.56 billion share on issue. Some will be in escrow for a couple of years, BUT 11.56 bil total.
If I divide the $8b mc by the 11.56 bil shares, I get 69 cents per share.
Going the other way, if I multiply the current share price by 11.56 billion I get a market cap of $28 billion which let's face it, is a tad high.

Can somebody tell me where I am wrong so I can kick myself for missing out on the 26% increase today.

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the math never worked for me , so i hit the parachute as soon as i read the details of the merger deal .

if the holders are still in profit and happy , good for them , i crystallized an acceptable profit , so i am content

Chemist Warehouse’s billionaire founders have cleared the final hurdle in their long-held ambition to create a listed pharmacy and retail giant, saying they have big ideas for the group which will start trading on the ASX next month after shareholders backed their $30 billion merger deal.

The reverse takeover of Sigma Healthcare, a wholesaler and franchiser with brands such as Amcal and Discount Drug Stores, has taken more than a year to be approved by regulators and finally, on Wednesday, shareholders.

The deal, which was approved in a 16-minute meeting at a Melbourne pub, will shake up the highly regulated pharmacy industry, creating a business with almost 1000 stores and annual earnings of $1 billion.

ADVANTAGES OF THE TRANSACTION
The advantages of the proposed merger are many and varied, with the potential to create significant value for Sigma shareholders, which is already evident in the share price accretion since announcement.

The proposed merger will create a leading Australian retail pharmacy franchisor and a full-line pharmaceutical wholesaler and distributor with a wide range of growth opportunities, both within Australia and Internationally. And the
complementary nature of both businesses creates a unique opportunity to extract significant cost synergies from bringing the businesses together. Management estimates put the potential cost synergies at $60 million per year that could be realised by the fourth-year post implementation. One-off costs to extract the enduring benefits is estimated at $75 million.

Whilst the merits of the proposal are clear, it is worth noting that if for any reason the proposal does not proceed, the trading price of Sigma shares may fall in the near term.

And finally, we acknowledge the extent of the related party transactions that currently exist, which are part of the Chemist Warehouse business and its evolution. I believe we have introduced a robust solution to govern and manage related party transactions moving forward....

PROPOSED SIGMA BOARD OF DIRECTORS
If the merger proceeds, Sigma and Chemist Warehouse have agreed on the composition of our proposed Board. Today we are seeking your approval for the election onto the Sigma Board of Mr Jack Gance, Mr Mario Verrocchi, Mr Damien Gance and Ms Danielle Di Pilla. They will join existing Board members being myself as Chairman, Vikesh Ramsunder, who will be CEO & Managing Director of the merged group, Dr Chris Roberts, Annette Carey and Neville Mitchell. Kara McGowan will continue as Company Secretary and General Counsel.

From my perspective, I am confident we have a strong Board with the requisite mix of skills and expertise from both the Sigma and Chemist Warehouse sides of the business. Having said that, we are also conscious that the composition of the Board does not meet the diversity and inclusion ratios, or the independence ratios expected of an ASX listed company, and this is something that we as a new Board will seek to address over time.

The one change from Sigma’s existing Board is the retirement of Kate Spargo following implementation of the transaction. Kate has been a Director of Sigma for more than nine years and was Chair of the Nomination and Remuneration Committee. Kate has been a highly valued member of the Board and I want to thank Kate for her significant contributions to the Board and Sigma more broadly.

In my entry, Tipping Comp 2025, as at: Thu 30 Jan ..not c.o.b. yet.

Market is loving the merger with Chemist Warehouse. SIG sp went + 12% in a day earlier in the week.

Chemist Warehouse is a strong and profitable business.

2.98 ; + 11.2% YTD