Sigma aims to seal the deal with $752m cash and Sigma shares.
It said it was also raising A$400 million (NZ$429m) to provide the increased working capital required to implement the Chemist Warehouse supply contract.
A brash newcomer, Chemist Warehouse (CWG) is not shy about its ambitions, declaring on its website: “Our great savings on products are due to aggressive pricing and larger volumes of trade.”
CWG shareholders will hold 85.75 per cent and Sigma shareholders 14.25 per cent of the merged group.
Sigma today told investors the proposed merger will unleash NZ$64m of savings a year.
The new behemoth would have a market capitalisation estimated at NZ$9.45b.
But regulators from Australia’s competition watchdog will have to approve the merger first, as will shareholders.
“The combination of Sigma and CWG is a transformational and compelling transaction for both companies,” Sigma said today.
It said the merger would create a full-service wholesaler, distributor and retail pharmacy franchisor.
The new entity would combine Sigma’s sophisticated distribution network with CWG’s retailing nous, Sigma added.
“The proposed merger is a step-change event for Sigma,” Sigma Chairman Michael Sammells said.
“With Sigma having had a commercial relationship with CWG and its founders spanning more than 40 years, we are excited by the efficiencies, synergies and growth opportunities that we anticipate being unlocked through the merger of the two complementary businesses.
“We look forward to building the next chapter of CWG’s success for the benefit of our customers, staff, franchisees and shareholders,” CWG Chairman Jack Gance said.