(Reuters) – Shares in Australia’s Sigma Healthcare surged more than 76% in early trade on Wednesday to post a record intraday jump, after the company said on Monday it would merge with Chemist Warehouse Group to form an A$8.8 billion ($5.77 billion) entity.
Shares of the pharmaceutical firm jumped as much as 76.5% to A$1.350 by 2335 GMT, hitting their highest level since Oct. 26, 2016.
Chemist Warehouse will own 85.8% of the merged company that will supply 1,000 Sigma-aligned pharmacies and own 600 Chemist Warehouse outlets, according to a statement.
The company expects the proposed merger to create savings initially estimated at about A$60 million per annum, expected to be realized after four years
Sigma is also raising A$400 million at 70 Australian cents apiece, which is an 8.2% discount to the stock’s last closing price on Dec. 6 before it went into a trading halt.
About 572.6 million shares will be issued in the capital raising, which equates to 54.1% of Sigma’s existing shares on issue.
($1 = 1.5244 Australian dollars)
(Reporting by Echha Jain in Bengaluru; Editing by Maju Samuel and Rashmi Aich)
