Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sigma-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:15966:1" rel="noopener">Sigma Healthcare (SIG AU)</a>'s proposed merger with Chemist Warehouse Group is being reviewed by Australian Competition and Consumer Commission (ACCC), with decision expected in 2H24.</li>
<li>Although Sigma is witnessing continuing momentum in its business (YTD sales are up by 6.6% YoY) and reaffirmed EBIT margin guidance, merger uncertainty overshadows the improved financial performance.</li>
<li>We think near-term positives of the company have already been priced in, thereby limited room for upside potential. Merger uncertainty will remain an overhang on the share prices.</li>
</ul>



Sigma Healthcare (SIG AU)'s proposed merger with Chemist Warehouse Group is being reviewed by Australian Competition and Consumer Commission (ACCC), with decision expected in 2H24.
Although Sigma is witnessing continuing momentum in its business (YTD sales are up by 6.6% YoY) and reaffirmed EBIT margin guidance, merger uncertainty overshadows the improved financial performance.
We think near-term positives of the company have already been priced in, thereby limited room for upside potential. Merger uncertainty will remain an overhang on the share prices.


Sigma Healthcare (SIG AU): Merger Uncertainty To Limit Upside Potential

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Privately-Held Chemist Warehouse’s (CWG) “transformational merger” with pharmaceutical wholesaler and franchisor <a href="https://www.smartkarma.com/entities/sigma-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:15966:1" rel="noopener">Sigma Healthcare (SIG AU)</a> will result in CWG's shareholders holding 85.75% of the merged company. </li>
<li>CWG shareholders will receive A$700mn in cash plus new Sigma shares. Sigma will also undertake a $400mn equity raising to fund working capital needs.</li>
<li>Sigma has the backing of its largest shareholder HMC. The risk to completion pivots off ACCC approval. </li>
</ul>


Privately-Held Chemist Warehouse’s (CWG) “transformational merger” with pharmaceutical wholesaler and franchisor Sigma Healthcare (SIG AU) will result in CWG's shareholders holding 85.75% of the merged company. 
CWG shareholders will receive A$700mn in cash plus new Sigma shares. Sigma will also undertake a $400mn equity raising to fund working capital needs.
Sigma has the backing of its largest shareholder HMC. The risk to completion pivots off ACCC approval. 


Sigma Healthcare (SIG AU): Chemist Warehouse's Reverse Takeover

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sigma-healthcare-ltd" target="_blank" data-smartkarma-citation="entities:15966:1" rel="noopener">Sigma Healthcare (SIG AU)</a> has announced a potential merger with Chemist Warehouse Group (CWG) to create a leading healthcare wholesaler, distributor and retail pharmacy franchisor.</li>
<li>With a market cap of ~A$8.5bn and a free float market cap of ~A$4bn, the merged company will make the cut for inclusion in the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a>. </li>
<li>Inclusion in the S&amp;P/ASX 100 Index looks just out of reach at the moment as does inclusion in some large global indices.</li>
</ul>



Sigma Healthcare (SIG AU) has announced a potential merger with Chemist Warehouse Group (CWG) to create a leading healthcare wholesaler, distributor and retail pharmacy franchisor.
With a market cap of ~A$8.5bn and a free float market cap of ~A$4bn, the merged company will make the cut for inclusion in the S&amp;P/ASX 200 (AS51 INDEX). 
Inclusion in the S&amp;P/ASX 100 Index looks just out of reach at the moment as does inclusion in some large global indices.


SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications

<ul>
<li>With three-quarters of the review period complete, there could be a bunch of changes across the S&amp;P/ASX family of indices in June.</li>
<li>The <a href="https://www.smartkarma.com/entities/red-5-ltd" target="_blank" data-smartkarma-citation="entities:7940:1" rel="noopener">Red 5 Ltd (RED AU)</a> / <a href="https://www.smartkarma.com/entities/silver-lake-resources-ltd" target="_blank" data-smartkarma-citation="entities:6529:1" rel="noopener">Silver Lake Resources (SLR AU)</a> merger could lead to an ad hoc change prior to the implementation of the June rebalance.</li>
<li>There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.</li>
</ul>


With three-quarters of the review period complete, there could be a bunch of changes across the S&amp;P/ASX family of indices in June.
The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.


S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to June

<ul>
<li>Tally 50 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>No new deals were discussed on Smartkarma this week; although a <a href="https://www.smartkarma.com/entities/lynas-corp-ltd" target="_blank" data-smartkarma-citation="entities:20374:1" rel="noopener">Lynas Corp Ltd (LYC AU)</a> / <a href="https://www.smartkarma.com/entities/mp-materials-corp" target="_blank" data-smartkarma-citation="entities:33108:1" rel="noopener">MP Materials Corp (MP US)</a>tie-in (again) rumoured.</li>
<li>Key updates took place on: <a href="https://www.smartkarma.com/entities/azure-minerals-ltd" target="_blank" data-smartkarma-citation="entities:16538:1" rel="noopener">Azure Minerals (AZS AU)</a>, <a href="https://www.smartkarma.com/entities/tietto-minerals-ltd" target="_blank" data-smartkarma-citation="entities:28006:1" rel="noopener">Tietto Minerals (TIE AU)</a>, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a>, <a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric (6967 JP)</a>, <a href="https://www.smartkarma.com/entities/tdcx-inc" target="_blank" data-smartkarma-citation="entities:34187:1" rel="noopener">TDCX (TDCX US)</a>, and <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>.
</li>
</ul>


Tally 50 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
No new deals were discussed on Smartkarma this week; although a Lynas Corp Ltd (LYC AU) / MP Materials Corp (MP US)tie-in (again) rumoured.
Key updates took place on: Azure Minerals (AZS AU), Tietto Minerals (TIE AU), JSR Corp (4185 JP), Shinko Electric (6967 JP), TDCX (TDCX US), and Hollysys Automation Technologies (HOLI US).



(Mostly) Asia-Pac M&A: Lynas, Tietto Minerals, JSR, Shinko Electric, TDCX

Australia

Sigma Healthcare Limited wholesales and distributes pharmaceutical products. The Company offers prescription, over-the-counter, and generic drugs. Sigma Healthcare serves customers in Australia.

Sigma Healthcare (SIG AU)