Chemist Warehouse duo to climb Rich List after Sigma deal

The valuations of both have been buoyed by the $700 million cash consideration which formed part of Chemist Warehouse’s acquisition by Sigma, in addition to the shares in the merged company they will hold. Underpinning the valuations are the generous dividends paid to Chemist Warehouse’s shareholders, including $645 million in the last two years.

The founding families have extensive property interests outside Chemist Warehouse too. The documents lodged for the merger reveal that Chemist Warehouse directors own properties for which the group paid them $32 million in rents in the last financial year.

Investment banker David Di Pilla may also be knocking on the door of the Rich List, following his role as kingmaker in the deal. His HMC Capital owned 19 per cent of Sigma going into the merger with Chemist Warehouse, where his sister Danielle was a franchisee, and will emerge with just under 3 per cent of the new company should the deal proceed.

As with Chemist Warehouse, however, HMC Capital is an unlisted public company and Di Pilla’s individual holding in the entity is unclear. His earlier success with Home Consortium, the former Woolworths Masters properties, had him just below the cut-off on previous Rich Lists.

Trained pharmacists

The precise holdings of other members of the Gance and Verrocchi families have not been disclosed in documents lodged with the ASX.

However, several members of both families are trained pharmacists and own outlets in their own right. This proved a handy fillip for growth in Chemist Warehouse’s early days, given ongoing restrictions against non-pharmacists owning pharmacies, and limits in most states and territories on how many pharmacies an individual can control.

Sam Gance’s son Damien Gance is a pharmacist and Chemist Warehouse’s long-time commercial director. Mr Verrocchi has two younger brothers, Adrian and Marcello, who are both also pharmacists.

It is possible that these siblings will own a significant proportion of the 4.25 million shares in the proposed merger attributed to other, non-escrowed former Chemist Warehouse shareholders.

Mr Gance opened his first pharmacy in Reservoir in Melbourne’s north in 1972, and hired Mr Verrocchi in 1980 because he could speak Italian, which was then the predominant language in pockets of the area.

The entrepreneurial Mr Gance later used his small chain of pharmacies to bring the Le Specs and Le Tan brands to Australia, selling that distribution business in 1991. The Gances and the Verrocchi family bought the shell of a friendly society and began exploiting a loophole in Victorian law that placed no limit on how many pharmacies a friendly society could own.

That loophole closed in the mid-2000s, after which the founders switched to a franchised model. Never popular with the pharmacy establishment, Chemist Warehouse ironically benefited from the Pharmacy Guild’s lobbying which has kept the major supermarkets out of the business.