Pinned straw:
Hi @Eand - you asked:
has anyone got any thoughts on the merger of sig and chemist warehouse and where this stock will go, after a trading halt in the week its been going down for 2 straight days [?]
So, I don't follow Sigma closely, however I have been a regular customer of CWH (Chemist Warehouse) for a long time. I have noted that CWH moved around a year ago from a land grab phase into a monetisation phase, which was no doubt intended to improve their profitability and make them a more attractive takeover target.
In the land grab phase, they provided two online services, ePharmacy.com.au and chemistwarehouse.com.au, and I only used ePharmacy which provided free shipping for any order that contained at least one script, and also free shipping for orders over $75, which then became any orders worth $50 or more. They were also prepared to sell at lower margins because of their scale, so that meant they were usually the cheapest option, which drove adoption. Their scale also allowed them to play suppliers against each other and extract better wholesale prices from them, in exactly the same way that Coles and Woolworths and Bunnings and Officeworks do with their suppliers. Being the largest gorillas means they can push the smaller guys around some, and they do.
Around a year ago, ePharmacy started charging freight (shipping) for ALL online orders, even ones worth hundreds of dollars and/or ones with scripts. When I rang them up to ask why, they just said it was a new company policy (no other/further explanation) but that Chemistwarehouse.com.au (run by the same parent company - CWH) DID offer free freight if the order had one or more script items in it. So I switched over to chemistwarehouse.com.au and stopped using epharmacy.com.au. I assume they had made a decision to phase out ePharmacy because it made far more commercial (economic) sense to offer a single online service rather than to continue to run two parallel online brands that basically provided identical services. They likely also realised that Chemist Warehouse had become a strongly recognised brand that was associated with cheaper prices, so they would be far better off leveraging off that name for all of their online services than to further develop EPharmacy. My assumption only, but that made sense to me.
I have also noticed prices have increased on most of the stuff that I buy. While they do offer half price specials regularly, as they always have done, for vitamins, supplements, etc., they are basing that on 50% off the RRP - or recommended retail price, and the RRP is purposefully set artificially high, i.e. higher than what anybody expects to charge, or to pay, meaning everybody discounts the RRP, just to different extents. What matters is the checkout price, and the checkout prices have been rising.
OK, so back to Sigma. The merger between Sigma and CWH whereby Sigma will pay the CWH vendors out and acquire all of the shares in CWH and the CWH founders also become Sigma directors progressed through the shareholder vote stage this past week, with shareholders voting overwhelmingly in favour of all resolutions at the January 29th meetings. This one IS going ahead - the final court hearing on Monday is really just a formality now, and the deal will settle on Tuesday (4th Feb) when Chemist Warehouse will lodge a copy of the orders of the Court with ASIC at which time the Scheme will become legally effective and binding on Chemist Warehouse Shareholders.
Now, to Sigma's share price:
Source: Commsec.
As we can see there, the Sigma (SIG) share price remains in an uptrend despite dropping back from a recent intra-day year high of $3.12 to close yesterday at $2.87. Point is that despite being a little choppy, the chart shows that SIG is making higher lows and higher highs and the trading range channel is still rising. So while past performance is never an accurate and infallible indicator of future performance, there doesn't appear to be any reason to worry about SIG being in a downtrend now, because they aren't, except for a super-short-term downtrend within a broader uptrend.
My own view @Eand - and remember that this is not a company I follow closely - is that SIG is still in an uptrend, despite two days of lower share prices, and that a fall from $3.03 to $2.87 over two days is just normal market girations and is nothing to worry about at all.
Finally, if you look at the following SIG daily trading stats, you can see that they have strung together a number of negative days at times, but that the positive days have still outnumbered the negative ones, hence the uptrend.
Source: Commsec.
Disclosure: Not holding.
Hope that helps.