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Sigma-Chemist Warehouse Merger

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    Sigma-Chemist Warehouse Merger

    Good morning, With the ACCC due to make an announcement on the 13th of June re the proposed merger between Sigma-Chemist Warehouse, what is MM's current view on SIG? What do you realistically think will SIG SP will do if the merger is waved through? Is MM considering a "pre-emptive strike" on SIG prior to what will presumably become one of Australia's biggest and best retail businesses? As a long term subscriber, I still look forward to my daily read. Thanks for all your hard work. Jeff

    Answer

    Hi Jeff,

    It seems to us that the positive news surrounding SIG and Chemist Warehouse is now factored into the price of SIG shares, therefore, that opens up the prospect of disappointment if something from left field came along, implying a ‘pre-emptive strike’ does not stake up for us before June.

    We do think Chemist Warehouse is a great business, however, under the SIG banner there will also be some complexities around SIG’s current wholesale distribution being impacted by their ownership of Chemist Warehouse. i.e. will high street Chemist’s be happy to buy from the company that owns their most aggressive competitor?

    • We are therefore neutral on SIG ~$1.26
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    Sigma Healthcare Ltd (SIG)
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