In today’s briefing:
- SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications
- Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover
- Costa Group (CGC AU): Wide Spread Ahead of the 30 January Vote
- Costa Group’s Shareholder Vote Set. Get Involved
SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications
- 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&P/ASX 200 (AS51 INDEX).
- Inclusion in the S&P/ASX 100 Index looks just out of reach at the moment as does inclusion in some large global indices.
Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover
- 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.
Costa Group (CGC AU): Wide Spread Ahead of the 30 January Vote
- The Costa Group Holdings (CGC AU) IE considers Paine Schwartz Partners’ A$3.20 offer fair and reasonable as it is towards the upper end of its A$2.62-3.28 valuation range.
- The scheme requires China SAMR and European Commission approvals. SAMR approval poses a timing risk but the scheduling of the scheme meeting reflects PSP’s confidence in securing the approvals.
- While not a knockout bid, the profit warning should help sway the retail vote in favour of the scheme. At the last close, the gross spread was 8.1%.
Costa Group’s Shareholder Vote Set. Get Involved
- On the 22 September, Costa Group Holdings (CGC AU) backed Paine Schwartz Partners’ (PSP) revised (and reduced) A$3.20/share best and final Offer.
- Costa’s Scheme Meeting has now been tabled for the 30 December, with implementation expected on the 26 February. The IE is supportive and Costa’s board unanimously recommends the transaction.
- This appears done. Key conditions are Costa’s shareholder vote and SAMR approval. I can’t see SAMR getting into a bind over berries.
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