Sigma takes legal action against Chemist Warehouse

Sigma is set to commence legal proceedings against the My Chemist/Chemist Warehouse group

Sigma Healthcare Limited said in a statement today that it has been in ongoing discussions relating to the operation of certain aspects of the current supply agreement with the group.

It says that My Chemist/Chemist Warehouse rejected offers of mediation and binding arbitration which had been proposed during these discussions.

“As a satisfactory resolution has not been reached, Sigma has now decided to commence legal proceedings against MC/CW,” says Sigma.

These proposed proceedings relate to the My Chemist/Chemist Warehouse group’s stated intention to acquire certain products from an alternate CSO Wholesaler.

Sigma maintains that under the existing agreement, My Chemist/Chemist Warehouse is not entitled to do this.

“Remedies to be sought by Sigma include declarations and injunctions for specific performance of the agreement,” Sigma says.

“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.

“While Sigma remains confident of its position, this action, combined with a continuation of the subdued start to the financial year, may mean that current year underlying EBIT could be up to 5% below FY2016/7 (subject to the outcome of the proposed proceedings).

“Ongoing legal costs will also impact earnings.”

Sigma says it values the relationship with the My Chemist/Chemist Warehouse group and will continue to provide operational support to it in accordance with the terms of the current Supply Agreement, which runs until June 2019.

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  1. Toby

    Wouldn’t you love to be a fly on the wall to see this one unfold?

    • PharmOwner

      I’d love to just settle back with some popcorn and watch their lawyers rack up huge legal bills. Hope it drags on for years. Moral of the story to Sigma: Doing business with CWH is hazardous to your (financial) health.

      • harry

        well done pharmacy owner I think the fun has just begun

  2. Tony Lee

    Frankly I think it’s funny, but guess black humour at best. Legals will make a killing & will be interesting how it affects SIP share price. I doubt that CWH is too worried & no doubt factored in any damage.

    • Peter Allen

      interesting to see the share price slide in the week before the announcement.
      It’s a job for the ASX

  3. harry

    well said sigma has been licking the backs for that long that its a matter of time they get the fut in the face

  4. Brettthereluctantpharmacist

    If you sleep with dogs, you get fleas.
    They deserve each other.

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