Could Wesfarmers, Woolies or Walgreens acquire CWH?

Chemist Warehouse Woden, September 2013.
Chemist Warehouse believes there is not enough competition under the current pharmacy model.

A sale of Chemist Warehouse might be possible in the near future, according to an article in The Australian which speculates on the discount giant’s future.

“The $5 billion-odd pharmacy giant Chemist Warehouse remains high on the list of targets for investment bankers eager to position themselves to land a large transaction next year, but while many think a listing is on the cards, perhaps a sale cannot be ruled out completely,” the piece in DataRoom says.

“One possibility is an acquisition by Wesfarmers or Woolworths, although most say the groups are trying to distance themselves from the retail space rather than wade deeper into the sector.”

Speculation that Chemist Warehouse might be considering listing on the Australian Stock Exchange has grown in recent weeks, with the Australian Financial Review’s Street Talk column reporting that it has been “spending increasing face-to-face time meeting with fund managers and investment bankers”.

The Australian says that Macquarie has been “showing the company around” as part of such discussions.

It also suggests that an American interest could be considering making a move on the discounter.

“One party that cannot be ruled out is US-based Walgreen, which has cast its eye over the operation before.”

The piece points out that the fate of Chemist Warehouse is restricted by the current ownership rules, but that the group “has a complex ownership model that has enabled the business to work around the restrictive ownership rules”.

It comes as News Corp media report on the “resurrection” of old Masters homewares sites as Home Consortium opens big new retail centres just in time for Christmas.

Chemist Warehouse, alongside major shareholder and chairman David Di Pilla (Chairman, Board of Directors at aged care provider Aurrum) and several others, is a shareholder in the group.

Its pharmacies are categorised under the consortium’s list of 38 retailers as “daily needs” alongside Coles and Woolworths – one of the three themes of the sites (the others are Leisure, Lifestyle and Education; and Homewares and Electrical).

Eight of the sites have now opened at Marsden Park, Penrith and Rutherford in NSW, Pakenham and South Morang in Victoria, and Toowomba, North Lakes and Tingalpa in Queensland.

Two more – at Joondalup, WA and Ballarat, Victoria – are expected to open by Christmas.

Retail analyst Geoff Dart told News media that existing shopping centre operations like Westfield and Mirvac are “generally in denial” and that retailers are considering hypermarket space due to the reduced rents.

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  1. geoff

    a slightly contrarian view is companies seek to float when things are good but could go bad and to privatise when share prices are low and the company looks like it has turned around. So if CWH is rumoured to be looking to list then maybe they are worried about Amazon and want to grab some profit now and share the risk with share punters. Re the Masters sites, I believe only one can have a CWH due to location rules?

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