Sigma Healthcare, the ASX-listed group that owns the Chemist Warehouse chain, has been involved in talks to acquire UK pharmacy group Boots, at an asking price of around $14 billion.

Sigma yesterday said it was in talks with private equity firm Sycamore Partners, which currently owns Boots. A deal is not yet done, and may not eventuate.

The news triggered a sharp drop in Sigma’s share price. If Sigma is successful, it would be the biggest offshore acquisition by an Australian company since CSL bought Swiss drug maker Vifor for $18.8 billion in 2022.

Sigma has a market capitalisation of $33 billion and would have to raise billions of dollars in capital to fund an acquisition of that size or find some partners. Boots is the dominant player in the UK market, with about 40 per cent market share.

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Greed-o-meter

Wesfarmers is one of the last true conglomerates on the ASX. Here is where its revenue comes from:

Source: Wesfarmers 2025 Annual Report

Fear & Greed Q+A today

On why AI is central to Wesfarmers' growth strategy, including at hardware giant Bunnings:

 

“The reality is that customers want to be able to engage with us in the way that suits them. If they want to shop online, click and collect, come to our stores for the great service we have in stores, that’s great. Through large language models and agentic commerce, customers can now engage with retailers in a really sophisticated conversational way.

 

So if we can do that well, we’ll obviously grow our revenues. This will be a revenue driver.

 

The other point is that, particularly in Australia, inflation is a problem, the cost of doing business is a problem, regulation is a challenge as well. Costs continue to go up and up and up. If we want to find ways to be more efficient in order to keep our prices lower for customers, then we really have to embrace these new technologies.”

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News in brief

Motorists might be facing a sharp jump in petrol prices at the end of the month, because the federal government has yet to sign off on an extension to the halving of the fuel excise.

Rental yields in the housing market are back under the microscope, as the outlook for capital growth is dented by interest rates, slower economic growth and budget changes. Currently yields are at record lows, but with house prices faltering, yields are expected to rise.

The largest expansion of Australia’s power grid in decades has finally been completed, creating a new 900-kilometre link between NSW, Victoria and South Australia that will soon make it easier to add wind and solar farms to the network

The Aussie dollar is back down to around 70 US cents, and has depreciated against the yen, British pound, euro and Chinese yuan. It reflects strength in the US economy and a drop in commodity prices.

Airline profits are expected to be cut in half this year because of the jet fuel shortage, driven by the Middle East war. According to the International Air Transport Association, the global airline industry is expected to make $US23 billion this calendar year, compared to $US45 billion last year.

Fear-o-meter

Aussie companies entering overseas markets have a mixed record. CSL’s $18.8 billion purchase of Swiss based Vifor has proven challenging for the local healthcare leader. Wesfarmers bought a UK home improvement chain called Homebase. That didn’t work. 

Some non-retail businesses have done a better job. Packaging company Amcor and insurer QBE have steadily and successfully acquired overseas businesses over many years.

Retailer Harvey Norman has done a good job building stores from the ground up and establishing its own brand in countries including Ireland and Slovenia. Domino’s Pizza has had mixed success overseas, going reasonably well in Europe but not in Japan.

And then there are companies like Guzman Y Gomez, who went abroad – in this case the US – tested the waters and then decided to drop plans to expand internationally, at least for now.

This isn’t Sigma Healthcare’s first foray into the UK. Last month it bought a 74 per cent stake in British group Greenlight Healthcare, which operates 22 pharmacies. The strategy was to take the Chemist Warehouse brand to Britain. It has also established some stores in Ireland.

There is no deal at this point, but clearly chief executive and co-founder Mario Verrocchi is interested. Given the share price response yesterday, investors seem to be saying hasten slowly.

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