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TERRY White Group and Chemmart will merge to form one of Australia's largest pharmacy networks.
The merged group is tipped for a combined retail turnover of $2 billion and will comprise approximately 500 pharmacies.
EBOS Group, a medical and pet care firm headquartered in New Zealand, will sell the business assets of Chemmart to Terry White in exchange for equity and will invest $18 million in cash for a 50 per cent equity stake in the merged entity.
EBOS Group is listed on both the NZX and ASX (EBO), with its share registry managed by Computershare (ASX: CPU) in Sydney.
Brisbane-based Terry White CEO Anthony White (pictured), who oversees a network of around 230 pharmacies, says both Chemmart and Terry White have complementary retail offerings and strong cultural synergies. The management team will be led by White as CEO.
He says significant investment in Terry White's enterprise resource planning system is already driving efficiencies and improved operations.
"The merger of the two networks creates a comprehensive national footprint and increased scale which, when combined with capabilities across retail, merchandise and private label, will improve the group's competitiveness and front line health service delivery for the benefit of all our pharmacy owners and customers," says White.
The franchise management entity will be renamed to reflect the multiple brands within the group and a broader health focus.
Chemmart executive director Duncan Phillips will join the existing executive team as chief operating officer. Patrick Davies, the EBOS Group CEO, will join the existing Terry White directors on the board of the merged entity.
White says the Terry White board unanimously supported the merger.
The proposed merger is still subject to Terry White shareholder approval and will be put to a vote at a meeting planned for late September 2016.
Under the merger terms, Terry White will return $13 million of capital to its existing shareholders in an equal access capital reduction of around 98c per share.
This news come after a record result for Terry White in the half year to March, with retail sales up 18 per cent on a like-for-like basis.
The company increased its net profit after tax during this half year by 927 per cent to $1.53 million, White adding this was supplemented by the $2.76 million acquisition of Chemplus in May 2015.
Stockbroking firm Morgans comments: "This is a great result for both EBOS and TWC shareholders. The pharmacy sector has delivered strong growth over the last two years and this is expected to continue."
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