The Sigma Healthcare Ltd (ASX: SIG) share price is deep in the red today.
Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock – which owns chemists including Amcal, Discount Drug Stores, and Guardian Pharmacy – closed down 2.5% yesterday at $2.78. In afternoon trade on Wednesday, shares are swapping hands for $2.63 apiece, down another 5.58%.
But don't break out your tiny violin for long-term shareholders just yet.
As you can see on the chart above, the Sigma share price remains up an impressive 175% over 12 months.
Go back just a little further, to 11 December 2023, and the ASX 200 healthcare stock is up a blistering 256%. Or enough to turn a $5,000 investment into $17,800.
What's going on with the Sigma share price?
As you're likely aware, the Sigma share price has received ongoing support since the company announced its $30 billion merger intentions with privately owned Chemist Warehouse on 11 December 2023.
Since that announcement, the mega-merger has proceeded more or less on track. In November, Sigma shareholders learned that the Australian Competition & Consumer Commission (ACCC) had approved the deal.
Next week, on 29 January, shareholders will vote on the deal, which has been unanimously recommended by the Sigma board. Should that pass as expected, the transaction should be completed by 12 February.
So, with everything appearing to be proceeding to plan, why is the Sigma share price down 7.2% this week?
Well, that could be driven by news that some of Chemist Warehouse's biggest stakeholders may be preparing to sell down their shares in the newly merged entity.
Chemist Warehouse franchisees looking to cash in
Citing unnamed sources, The Australian Financial Review reported earlier this week that the owners of some of Chemist Warehouse's largest franchisees have been in discussions with a number of Equity Capital Markets (ECM) teams about selling shares.
This could be throwing up headwinds for the Sigma share price, with those sources noting the franchisees hold a combined $900 million to $1.1 billion worth of stock from their historic holdings of unlisted Chemist Warehouse shares.
Upon listing, the newly merged ASX 200 healthcare behemoth represents the first chance many of these investors will have had to cash those shares in for a tidy profit.
Now, the Sigma share price is likely getting spared a heavier retrace, with analysts expecting a lot of interest from active investors, as well as a wave of passive money from index tracking funds, to buy into the merged company.
But the ECM teams cited by the AFR expect that the amount of passive money looking to buy will be significantly less than the value of the shares Chemist Warehouse franchisees may be looking to sell.
According to the ACCC, following completion of the deal, Chemist Warehouse shareholders will hold 85.75% of the ASX listed merged entity while Sigma shareholders will hold 14.25%.
