It was a story of two forms of entry journalism at a gritty pokies pub in Preston final night time, as 52 of the 311 Chemist Warehouse shareholders confirmed up in particular person to vote unanimously in favour of the $34.7 billion merger with Sigma Healthcare.
The AFR’s senior Chanticleer columnist James Thomson was contained in the room and given entry to the varied Chemist Warehouse billionaire founders, producing this color piece that led the web site final night time.
Thomson’s request for entry was in all probability helped by the AFR declaring in December that the three Chemist Warehouse billionaire founders — CEO Mario Verrocchi, present Chemist Warehouse chair Jack Gance and his brother Sam Gance – have been the papers joint 2024 AFR Enterprise Particular person of the Yr, alongside one other billionaire, AirTrunk’s Robin Khuda. The Melbourne-based Gance brothers travelled to Sydney for the glittering black-tie dinner to simply accept their award.
Regardless of being a Sigma shareholder and a journalist, I used to be locked exterior and compelled to sit down with the Computershare registry employees through the 16-minute Chemist Warehouse assembly, though billionaire Damien Gance (Sam’s son) was ok to deliver out a free serving of lasagna, produced by The Olympic lodge kitchen employees.
The Australian’s Wealthy Checklist editor John Stensholt was additionally given entry to jot down this story final night time, which was accompanied by a fist-pumping picture of Verrocchi and Jack Gance exterior the pokies pub.
Earlier within the day at Melbourne’s Sofitel Lodge on the high of Collins St, about 50 of Sigma Healthcare’s 20,000-plus shareholders gathered for a gathering the place they voted overwhelmingly in favour of the Chemist Warehouse merger. There have been a hefty 11 resolutions to cope with, together with the appointment of 4 Chemist Warehouse representatives to the Sigma board.
Sadly, I used to be the one Sigma shareholder asking questions within the room and bought up on eight of the 11 resolutions, dragging what would have been a 30-minute assembly out to virtually an hour.
The incoming Chemist Warehouse nominees to the Sigma board — Verrocchi, Jack Gance, Damien Gance and Mario’s cousin Danielle Di Pilla — all sat within the entrance row however refused to provide stump speeches and even reply questions.
Jack provided up nothing after I requested why his brother Sam wasn’t becoming a member of the Sigma board when each of them will personal greater than $4 billion in inventory individually, primarily based on Sigma’s closing worth of $3.03.
I even requested Mario and Jack to simply reply with a nod as as to whether Sigma shareholders may attend the night Chemist Warehouse assembly as observers and behave similar to them by sitting quietly and saying nothing. Jack shook his head and muttered that it was “a shareholders’ assembly”.
If you happen to consider the press, Chemist Warehouse opted for what’s referred to as a back-door itemizing, which includes a a lot bigger non-public entity merging with a smaller current listed firm.
Sigma, which is primarily a pharmacy wholesaler but in addition owns retail pharmacy manufacturers corresponding to Amcal, agreed to pay $700 million in money to Chemist Warehouse shareholders after which situation a truckload of shares, such that Sigma buyers would solely personal 14.25% of the mixed entity.
Alas, ASIC and the ASX did a superb job forcing Chemist Warehouse to reveal much more data than it anticipated, together with a cracking December half-year consequence on Tuesday, which despatched the Sigma share pricing hovering 12% to report highs.
All up, buyers liked what they noticed concerning the Chemist Warehouse juggernaut, sending the Sigma share worth hovering from 76c on the day the merger was introduced, in December 2023, to final night time’s report shut of $3.03, which valued Sigma at $4.94 billion and the mixed enterprise at a staggering $34.7 billion.
Absolutely, with this embarrassment of Chemist Warehouse riches, it will likely be tougher now for the state and federal governments to proceed to restrict competitors by banning supermarkets from providing in-store pharmacies.
If the inventory holds at this degree, Chemist Warehouse is successfully paying $4.2 billion for Sigma, when it may have purchased it for lower than $1.5 billion on the open market. Although the ACCC may need been just a little more durable on a straight hostile takeover than the surprisingly agreeable place it took on the back-door itemizing proposal.
I thanked the billionaires for gifting us Sigma shareholders a collective $3 billion in worth yesterday, and CEO Mario Verrocchi smiled, giving his Chemist Warehouse chair and co-founder Jack Gance just a little pat on the leg.
The most well liked governance situation going ahead would be the huge array of associated celebration transactions to be managed.
Seeing as no-one was providing up any solutions yesterday, I provided up some free recommendation: disclose within the subsequent annual report the precise Chemist Warehouse shops owned privately by the founders that may generate $32 million in annual lease funds from the general public firm, and likewise surrender the follow of Chemist Warehouse or any of its particular person billionaire founders taking fairness positions in particular suppliers, one thing they’ve executed commonly prior to now.
The three Chemist Warehouse founders have agreed to lock up 90% of their mixed 48.34% stake within the mixed firm till August 2026 and received’t be capable to promote the primary 10% of their mixed shares till the full-year outcomes are launched in August 2025.
Nevertheless, the opposite 308 Chemist Warehouse shareholders (lots of whom are franchisees) will collectively personal about $12.5 billion value of Sigma shares, or 36% in whole. They’re free to promote as soon as they’re issued the brand new Sigma shares on February 12.
Extremely, 53 separate Chemist Warehouse shareholders personal shares value greater than $50 million.
Macquarie Group is called the Millionaires Manufacturing facility, however it has not produced a single billionaire — in contrast to the six at Chemist Warehouse, particularly the three Gance chaps who have been within the pokies home final night time, CEO Mario Verrocchi and his two youthful brothers, Adrian and Marcello, who’re each additionally pharmacists and can individually personal about $1 billion value of Sigma inventory as soon as the deal completes.
Good work if you may get it!
