A corporate tie-up in Australia will produce a parade of fortunes in an industry hardly known for extravagance.
More than 100 shareholders will officially be millionaires. At least 10 will be worth over US$100 million. And atop the group are three billionaires, including one former intern.
Behind this blitz of riches, rare even for Australia where a decades-long mining boom has minted fortunes, is the merger of closely held pharmacy franchiser Chemist Warehouse with publicly traded Sigma Healthcare – a deal that will create one of Australia’s largest pharmacy chains and wholesalers.
The biggest winners: Chemist Warehouse’s founders – Jack Gance and his brother Sam – and Mario Verrocchi, who rose from intern to become the chain’s chief executive officer.
Each will be worth at least US$2.5 billion when shares in the combined entity start trading Thursday, according to the Bloomberg Billionaires Index. Verrocchi will have a fortune of US$4.4 billion.
The deal is hailed both as a rags-to-riches example of the Australian “battler” sentiment, and as a glaring example of how low-cost chains edge out legions of mom-and-pop pharmacies. It’s also a coming out of sorts for the trio who built the chain over decades largely while staying behind the scenes.
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“We spent 50 years heads down, bum up, doing what we needed to do,” Verrocchi told The Australian newspaper in 2023.
Chemist Warehouse declined to make the men available for interviews.
The chain started with a lone pharmacy in northern Melbourne and is now a ubiquity in Australia – so famous that an episode of the nation’s hit kids animated series Bluey was set in a store.
Legions flock to its bright-yellow storefronts to fill prescriptions cheaply, buy generic and discounted over-the-counter drugs, and browse its selection of nutritional supplements, toothpaste and other household goods that are stacked high around the stores.
Combined with Sigma, it will franchise or co-own more than 900 pharmacies in Australia, New Zealand and Ireland, and a handful in Dubai and China. It will also supply products to more than 3,500 stores. Taken together, the two companies collected US$4.2 billion of revenue last year.
The Gance brothers, sons of Polish parents who fled during World War II and settled in Australia, both studied pharmacy at university. In 1972, they bought their first pharmacy.
They later expanded and began coordinating their supply chain with other chemist stores. The strategy culminated with the creation of what would become Chemist Warehouse – a drug store franchise modelled on big-box retailers competing on price.
Helping them grow this concept was Verrocchi. After he graduated with a degree in pharmacy, the brothers hired him in 1980 because they’d opened a store in a neighbourhood full of Italian migrants and needed someone who knew the language, Verrocchi has said. The three will collectively own roughly 48 per cent of the combined entity.
Family members of both Verrocchi and the Gances have been involved in the business. Taken together, the families owned or partly owned 180 of the chain’s Australian pharmacies at the end of last year.
“It was a family-and-friends business model,” said Helen Bird, a senior lecturer at Swinburne Law School in Melbourne who specializes in corporate governance. She said this helped the company navigate laws restricting how many pharmacies a single person could operate. (Chemist Warehouse has not been accused of wrongdoing.)
Thursday’s listing won’t just cement the fortunes of Verrocchi and the Gances. More than 100 shareholders have stakes worth between A$5 million (S$4.23 billion) and A$25 million, according to an analysis by proxy advisory firm Ownership Matters. Among them are executives and other long-time employees.
Sam Gance’s son Damien, who is Chemist Warehouse’s chief commercial officer and will be on the board of the combined company, holds a stake worth roughly US$700 million, filings show. Danielle Di Pilla, who’s a senior executive and a cousin of Verrocchi, has shares worth about US$185 million. She will also be a director.
Sigma, the other party in the transaction, was founded in 1912 by two Melbourne pharmacists and went public in 1999. It largely operated as a wholesaler before buying its first pharmacy franchiser in 1997. BLOOMBERG
