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
- Mankind Pharma Placement – Its Expensive, but at Least It’s High Quality
- Pharmaron Beijing (3759.HK/300759.CH) – Share Price Would Continue to Underperform
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.
Mankind Pharma Placement – Its Expensive, but at Least It’s High Quality
- A group of shareholders is looking to raise around US$600m via selling a 6.9% stake in Mankind Pharma.
- MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
- We have looked at the IPO and lock-up release earlier. In this note, we talk about the other deal dynamics.
Pharmaron Beijing (3759.HK/300759.CH) – Share Price Would Continue to Underperform
- Pharmaron’s performance has shown a clear downward trend this year, and the growth in 23Q4 may be even lower. That means this year’s results could fall short of management’s expectations.
- The essence of unsatisfactory profit margin is due to low capacity utilization/management efficiency.The underlying reason is the sharp decline in drug R&D demand due to the deterioration of financing environment.
- Pharmaron seems ill-prepared in peptide CDMO, and its performance would further lag behind Wuxi AppTec in the future. Pharmaron may not be able to contribute alpha during industry downturns.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
