“Spooked” Sigma infuriates biggest shareholder as chemists’ war changes scripts again

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Current Managing Director Mark Hooper is busy packing his potted plants in cardboard boxes and booking a rental car to leave the office for the last time, while pending Managing Director Vikesh Ramsunder is still negotiating his place parking lot.

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The timing suggests that Sigma’s board of directors were scared that the farmers at Wesfarm crashed their long-term plan to log into the API. “Being scared is no reason to write a blank check,” Mawhinney says in his categorical criticism of the deal.

He thinks the only chance to save Sigma from a financially insane affair would be for his board of directors to come to their senses. This is the moment when Mawhinney clings to the straw.

He hopes the second line of defense will be the prospect of the Sigma / API link being torpedoed by the Australian Competition and Consumer Commission.

Both players are involved in pharmacy retailing, but more importantly, they are two of the top three Australian retail pharmacy suppliers.

A 2002 merger deal was blocked by ACCC, but the landscape has changed in many ways, including the move to the Internet and the emergence of Chemist Warehouse as a significant force in the retail scene. detail.

For the $ 65 billion Western Australian conglomerate, the $ 764 million offer for API is just an appetizer.

In reality, Mawhinney’s best hope of being saved is for Wesfarmers to lift their bid for the API and outbid Sigma.

For the $ 65 billion Western Australian conglomerate, the $ 764 million offer for API is just an appetizer – the price it is willing to pay to throw in a kick. eye to the beauty and health sector which he says clearly has growth potential.

Famous for its financial discipline, it remains to be seen whether Wesfarmers is willing to pay more.

At this point, the API board has allowed both suitors to do their due diligence, but favors Sigma’s higher bid. Once both parties have looked under the hood of the API, they will be able to determine if they are ready to continue a bidding war.

Sigma has the advantage of being able to access up to $ 45 million in annual synergies from the merger, which in theory justified it offering a higher price tag.

If Wesfarmers is ultimately successful, small pharmacists genuinely fear the shape of the industry will change.

Although large listed companies such as API and Sigma have retail operations, Wesfarmers has demonstrated in office equipment and supplies that scale is king.

He is also expected to bring his vast online, loyalty and data skills to the pharmacy and beauty markets. Acquiring the API would only be the beginning.

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