Sigma shares rocket as ACCC consults on proposed undertaking
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More news: Shares in Sigma Healthcare soared after the competition regulator invited submissions on the pharmacy wholesaler's proposed court-enforceable undertaking to address concerns over its acquisition of Chemist Warehouse.
Sigma shares were up 13% to $1.63 by 11am AEST, having surged more than 140% over the last 12 months.
ACCC consults on Sigma's remedy for Chemist Warehouse merger
The news: The competition regulator is seeking views on a proposed court-enforceable undertaking offered by Sigma Healthcare in relation to its proposed acquisition of Chemist Warehouse.
The context: The Australian Competition and Consumer Commission (ACCC) published a statement of issues in June which identified a range of preliminary competition concerns with the proposed acquisition.
These concerns included the potential harm to pharmacies currently supplied by ASX-listed Sigma and the potential for Chemist Warehouse to access these pharmacies' data in ways that damage competition.
In response to the preliminary concerns, Sigma has offered a court-enforceable undertaking that would require the prescription medicine wholesaler to:
- Not prevent or hinder franchisees who entered into their franchising arrangements prior to 1 January 2024 from terminating their franchise agreements with Sigma for a period of three years;
- Place restrictions on the collection, us and disclosure of confidential data and information from Sigma wholesale customers and franchisees for a period of three years; and
- Remain a participating pharmaceutical wholesaler under the Commonwealth Government's Community Service Obligation arrangements for at least five years, which means meeting certain service standards and compliance requirements for wholesaling of prescription medicines to all pharmacies.
The ACCC is inviting submissions on the proposed undertaking by 14 October and has pushed back its decision on the merger to 7 November, 2024.
Last December, Sigma agreed to the $700 million merger with Chemist Warehouse, which would form the largest pharmacy retailer listed on the ASX.
What they said: "We are now seeking feedback from stakeholders on whether the draft undertaking offered by Sigma may be capable of addressing the competition concerns arising from its proposed acquisition of Chemist Warehouse," ACCC chair Gina Cass-Gottlieb said.
"While the ACCC is publicly consulting on this undertaking, this should not be interpreted to mean that this or any other form of undertaking will ultimately be accepted by the ACCC," she said.
The source: ASX announcement
