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SIG - Sigma Healthcare

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I was going to call it last night but I think SIG might be on a small run up.

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I am out of this! better opportunity somewhere else. again this is my thing so this is not a recommendation to buy or sell. Have a great night everyone!
 
The takeover with CW is not looking good IMO, if it doesn't go through many will be holding the bag.

I closed out ages ago, it's just too much risk for me.
 
Dona Ferentes said:
A decision won’t be made until October.
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It is interesting that as the decision approaches the SIG price is increasing. A report I saw when the ACCC report was released indicated there were ways to overcome some of the ACCC concerns by the merged group making various undertakings.

I bought at the time of the ACCC report on the basis that even if the merger does not proceed, it does not affect the SIG business which should continue to grow.

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down 2.4 per cent
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PHARMACY wholesaler and retailer Sigma Healthcare (ASX:SIG) says its significant drop in interim earnings is due to ongoing costs associated with the impending merger with retail chain Chemist Warehouse.

Sigma told the ASX on Wednesday that net profit for the half-year ending July 31 plunged 67%, down to just $3.7 million on a statutory basis.

The company attributed the fall to one-off costs related to the looming $8.8 billion deal, which still requires ACCC approval, for the merger and the new supply contract that accompanies it, replacing the one previously held with EBOS (Symbian) of New Zealand.

Revenue rose by 9.4%, reaching $1.84 billion, and the company will pay an unchanged interim dividend of half a cent per share.

Sigma stated that without the one-off costs, net earnings increased to $13.7 million on a 'normalised' basis.

Sigma also disclosed the full-year figures for Chemist Warehouse, which reported a net profit increase to $540 million for the year ending June 30, up from $302 million in 2022-23.

Chemist Warehouse reported revenue for the year to June 30 rose to $3.29 billion, up from $3.09 billion in the previous year. Gross profit surpassed the billion-dollar mark for the first time, reaching $1.043 billion, up from $917 million in 2022-23.

In Wednesday’s statement, Sigma CEO Vikesh Ramsunder said the company had initiated a large new supply contract during the half-year, which “will underpin Sigma’s growth for the next five years and provide strong fixed cost absorption.”

Even after incorporating the new supply contract volumes, Sigma will still have approximately 35% available capacity in its wholesale business to support future growth ambitions without the need for major capital investment.
 
TimeISmoney said:
It will be the top loser too if the acquisition doesn't go ahead.
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IMO the SIG shareholder has already lost ( if they are still holding )

they will effectively lose control of the company to Chemist Warehouse , however should the reverse take-over fail ...the Chemist Warehouse folk , might have a punch in the face

i exited SIG shortly after the offer was announced in detail
 
divs4ever said:
IMO the SIG shareholder has already lost ( if they are still holding )

they will effectively lose control of the company to Chemist Warehouse , however should the reverse take-over fail ...the Chemist Warehouse folk , might have a punch in the face

i exited SIG shortly after the offer was announced in detail
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I look at it a little differently. Those who bought after the merger announcement were in effect investing in Chemist Warehouse. As I said previously, I bought when the ACCC published their non-decision in June because it left the door widely open for the merger to proceed by not making the decision.

The ACCC report indicated that it was not concerned with the size of the merged entity. It pointed out that EBOS is larger than CW and the merged entity will not be significantly larger than EBOS. Their concern mainly cantered around CW being able to access the details of those Sigma customers who are competitors to CW. This can be easily accommodated by undertakings put in place by the merged entity.

In their last report, ACCC indicated it was happy with the legally enforceable undertakings offered by CW and would ask for feedback from the industry. As it appeared a done deal, the market reacted.

I bought on the basis of a low risk and high reward, and I have obviously bet on the merger proceeding. So in effect, I am investing in CW. If the merger does not proceed, then SIG will go back to business as usual which is growing anyway.
 
Country Lad said:
I look at it a little differently. Those who bought after the merger announcement were in effect investing in Chemist Warehouse. As I said previously, I bought when the ACCC published their non-decision in June because it left the door widely open for the merger to proceed by not making the decision.

The ACCC report indicated that it was not concerned with the size of the merged entity. It pointed out that EBOS is larger than CW and the merged entity will not be significantly larger than EBOS. Their concern mainly cantered around CW being able to access the details of those Sigma customers who are competitors to CW. This can be easily accommodated by undertakings put in place by the merged entity.

In their last report, ACCC indicated it was happy with the legally enforceable undertakings offered by CW and would ask for feedback from the industry. As it appeared a done deal, the market reacted.

I bought on the basis of a low risk and high reward, and I have obviously bet on the merger proceeding. So in effect, I am investing in CW. If the merger does not proceed, then SIG will go back to business as usual which is growing anyway.
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They're trying to take the middleman out, SIG already supplies to CW but then they'll have less competition in the areas where chemists are underrepresented. All the SIG CEO's are worried about is getting on the bigger payroll.

It was trading at 70c before the merger was announced, and SIG hasn't tripled in profits since then, I held during one of the previous divs and they paid in half a cent. It's going to dump the SP like all hell if the merger fails.
 
should the merger fail ( and i don't think it will collapse completely ) i will CONSIDER a reentry

to me CW converts SIG into mostly a retail outlet , and i have plenty of retail exposure ( especially as WES gobbled up my API holding )

but good luck to holders

i just don't like the current deal ( and i made some profit on the exit , so all is good , here )
 
divs4ever said:
should the merger fail ( and i don't think it will collapse completely ) i will CONSIDER a reentry

to me CW converts SIG into mostly a retail outlet , and i have plenty of retail exposure ( especially as WES gobbled up my API holding )

but good luck to holders

i just don't like the current deal ( and i made some profit on the exit , so all is good , here )
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I've seen it happen with mining stocks a few times, where the SP goes up then the merger fails and everyone flees because they're waiting for the merger to sell.

If the merger happens the SP could go as far as $10, it's just how much risk do you want to take on board?

I'd be very careful with this company.

Former Sigma Healthcare general manager sentenced for insider trading​

Published 27 June 2022 ASIC
 
TimeISmoney said:
I've seen it happen with mining stocks a few times, where the SP goes up then the merger fails and everyone flees because they're waiting for the merger to sell.

If the merger happens the SP could go as far as $10, it's just how much risk do you want to take on board?

I'd be very careful with this company.

Former Sigma Healthcare general manager sentenced for insider trading​

Published 27 June 2022 ASIC
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i did OK with SIG ( not half as good as a trader buddy did ) , but yes i am not so happy with the current company ( if the deal completes )

sure i would rather have exposure to medicine manufacture/distribution , but not at 'any price'

unless something unusual happens i will stick with the current odd-bods in the space ( VLS , VIT ,CCO and DSK )

VLS and DSK are doing nicely while CCO and VIT are looking like train-wrecks , i would rather still have API but WES threw a wad of cash at me instead
 
TimeISmoney said:
If the merger happens the SP could go as far as $10, it's just how much risk do you want to take on board?
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To date, I have been concentrating on the probability of the merger completing and I am quite confident that it will.
Seeing your "throw-away" comment about the possible price @TimeISmoney I decided to go through the actual merger proposal document. A couple of things concerned me and try as I may, I could not get my head around some of those merger conditions.
I have always had the view that if I could not understand the business, I don't buy it. In this case I can't understand some of the merger conditions so I sold today and took the profit.
 
Country Lad said:
To date, I have been concentrating on the probability of the merger completing and I am quite confident that it will.
Seeing your "throw-away" comment about the possible price @TimeISmoney I decided to go through the actual merger proposal document. A couple of things concerned me and try as I may, I could not get my head around some of those merger conditions.
I have always had the view that if I could not understand the business, I don't buy it. In this case I can't understand some of the merger conditions so I sold today and took the profit.
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yep ,

i just took the exit at a lower price and earlier , i had several concerns even though i understood it was a reverse take-over
 

Regulator approves Sigma-Chemist Warehouse merger​

The Australian Competition and Consumer Commission has approved the Sigma Healthcare-Chemist Warehouse merger.

“The ACCC found that the proposed merger is unlikely to substantially lessen competition,” says ACCC chairwoman Gina Cass-Gottlieb.

“Consumers will continue to have choice between smaller format stores offering personalised services to consumers and the Chemist Warehouse offering, focussed on larger format discount stores and front-of-store offerings.”

The ACCC also considered whether the acquisition would impact the supply of pharmacy retail products, including generic medicines, and concluded that multiple channels were available to suppliers and manufacturers.

Sigma is required to lift contractual restrictions for pharmacies in longer-term contracts to switch to a new wholesaler or banner group.

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Country Lad said:
To date, I have been concentrating on the probability of the merger completing and I am quite confident that it will.
Seeing your "throw-away" comment about the possible price @TimeISmoney I decided to go through the actual merger proposal document. A couple of things concerned me and try as I may, I could not get my head around some of those merger conditions.
I have always had the view that if I could not understand the business, I don't buy it. In this case I can't understand some of the merger conditions so I sold today and took the profit.
Click to expand...


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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