Sigma drops Chemist Warehouse legal action

Sigma has decided not to pursue its legal action against My Chemist/Chemist Warehouse

Sigma Healthcare Limited and My Chemist/Chemist Warehouse Group have entered into a formal negotiation period to seek a commercial resolution of the dispute between the two.

Sigma had initiated legal proceedings against MC/CWH over certain aspects of the supply arrangement with the group.

The discount giant had stated the intention to source some lines from an alternate CSO supplier, but Sigma maintained that MC/CWH was not entitled to do so.

Sigma said in May that following ongoing discussions between the two parties, MC/CWH had rejected offers of mediation and binding arbitration.

“If MC/CW acts in accordance with their stated intention, the impact on Sigma’s EBIT is expected to be approximately $5m – $10m per annum,” Sigma said at the time.

Sigma shares plunged to a 12-month low in the wake of the announcement, from $1.185 before the announcement to $0.755 as of midday 25 May—a drop of 36% within less than two days.

Now, Sigma says that it will discontinue legal proceedings. It says if a commercial agreement is not reached, the two parties have agreed to confidential and binding mediation and arbitration.

“Sigma values the long term relationship with MC/CW and continues to provide operational support in accordance with the terms of the current Supply Agreement which runs to June 2019,” it said today.

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  1. The Cynic

    I don’t know why. But the image of swimming with sharks springs to mind.

  2. FakeMoralOutrage

    It is strangely reminiscent of the parole scene in the movie “Backdraft”. In brief, detectives are sent out to catch a serial arsonist using information from another arsonist who is already in prison after being injured and subsequently captured.

    “I suddenly lost my concentration… and my animal, it turned on me.”

    They created it and now they have lost control of it. Good luck getting it back on the leash !

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