It’s been a ‘big’ five weeks or so for Sigma Healthcare and a 52-week low for the shares yesterday capped off what has turned out to be a boom-and-bust period.
Just over a month ago, Sigma was briefly a wannabe pursuer of its old adversary Australian Pharmaceutical Industries (API), after Wesfarmers launched its initial approach.
Then former CEO Mark Hooper walked after Sigma revealed its ambitions for API. Hooper is staying till February 28 to help with the transition.
Then last week Sigma moved to being a possible target after Woolworths overbid Wesfarmers for API and triggered the start of what could be a greater focus on corporate activity in the pharmacy sector.
Then on Monday Sigma became a patient and moved to the corporate sick list as it downgraded earnings guidance by forecasting a 10% slide in earnings for its 2021-22 financial year.
The company had previously been giving guidance that earnings would be just 5% lower than last year.
The company blamed a tough transition to a new “enterprise resource planning” system, which rolled out in August but which has had several teething issues and resulted in an increase in operating costs for the half.
Interim chief financial officer Jeff Sells said on Monday the difficulties had been resolved but the flow-on effects would continue.
“We are confident the actions already taken and in progress will see the technical challenges with our ERP implementation largely confined to FY22. However, these issues have affected sales in FY22 which will flow through to FY23 sales, with the impact expected to abate as we progress through FY23,” he said.
Sigma shares fell more than 7% to 48.5c. That’s the lowest they have been for more than a year.
…………
Boral has taken the amount raised by the selloff of its mostly US assets to well past $4 billion with the sale of its American fly ash business for around $1 billion.
US group Eco Material Technologies will pay $US755 million for the business after what Boral CEO Zlatko Todorcevski described as a rigorous and competitive process.
“For Boral’s shareholders, we have now unlocked substantial value through a successful divestment program.”
The sale was part of a divestment program that has refocused the business on its Australian materials business with the backing of controlling shareholder Kerry Stokes’ Seven Group.
“Together with the sale of the North American Building Products business and our stake in Meridian Brick, following finalisation of this transaction, we will have divested the North American businesses for more than $4 billion,” Mr Todorcevski said yesterday.
That leaves the way open for Boral to do a massive capital return to shareholders, which will help Seven Group which paid $7.40 a share for its 60% stake in Boral that is now worth around $6.27 after falling to $6.17 last Friday.
But it also leaves the way open for Boral to buy a big related asset from Seven Group in exchange for cash and more Boral shares.
