Proxy advisory firm Ownership Matters said on Monday it recommends that shareholders of Sigma Healthcare vote in favour of Chemist Warehouse’s reverse takeover of the pharmaceutical company, citing significant shareholder value.

Sigma Healthcare will conduct a shareholder meeting on January 29 to seek approval for the deal, which will create a $5.8 billion entity.

As part of the deal, which was announced in December 2023, Chemist Warehouse will buy Sigma for stock and $700 million in cash, giving it a roughly 85 per cent stake in the merged entity and a back door to list on the Australian stock exchange.

In early November, the Australian competition regulator cleared the deal after the companies made concessions to alleviate competition concerns.

Shares of Sigma Healthcare have surged more than 300 per cent since the announcement of the deal. It was last down 1.2 per cent at $2.965.

• Reporting by John Biju in Bengaluru; Editing by Sonia Cheema, of Reuters.