The big supermarkets compete strongly in these segments.

So after ten months of deliberations and a range of concessions from the merging parties aimed at fortifying wholesale supply and protecting the Sigma franchisee pharmacies, the ACCC has concluded that enabling a dominant player in the industry won’t damage it.

Sigma countered initial fears from its contracted franchisees by offering them a path to exit the network. It also promised to restrict the collection and use of customer and franchisee data to ring-fence it from being accessed by Chemist Warehouse.

“To help ensure those pharmacies in longer-term contracts are able to switch easily to a new wholesaler or banner group, we accepted an undertaking that requires Sigma not to enforce contractual restrictions on exit and ensures payments under contracts do not make it costly for a pharmacy to switch,” ACCC chair Gina Cass-Gottlieb said.

Thanks to the ACCC green light, it was off to the races for Sigma shareholders. Technically, this listed company will buy the unlisted Chemist Warehouse, but in practical terms it is a back door listing and reverse takeover.

The founders of Chemist Warehouse will emerge with control of the combined entity, which will boast earnings of almost half a billion dollars, plenty of access to merger cost-cutting and further potential for expansion.

The prospect saw salivating investors push Sigma’s share price up 23 per cent. The emergence of a sizable health care/retail company with a strong business model, brand and earnings is just the kind of company that Australian investors want.

As I noted 11 months ago, there is lots to like about this deal – most particularly that the marriage of these two companies is symbiotic. They both bring complementary assets to the union.

But it is Chemist Warehouse that brings the heft, and a long history of growing a large and successful business from scratch.

After decades of private ownership, the two billionaires who built the Chemist Warehouse empire, Jack Gance and Mario Verrocchi, will be given an exit strategy.

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They are now getting together with the smaller, but publicly listed Sigma – transforming the combined listed entity into one that will be large enough to excite the interest of institutional shareholders.

The escrow provisions preventing the two founders from selling their combined 49 per cent stake will be fully lifted after the company’s results in August 2026.

This could be viewed as positive in that there will be more shares available to outside shareholders over time.

The negative take on this is that the brains behind the highly successful Chemist Warehouse could cash in their chips in a couple of years.

But for now, welcome to the new chapter in big box chemist retail.

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