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UPDATE 3-Australia's Sigma Healthcare signs $5.8 bln merger deal with Chemist Warehouse

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Sigma and Chemist Warehouse in $5.8 bln merger

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Sigma to acquire Chemist Warehouse in a cash and scrip transaction

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Sigma also undertaking a A$400 mln capital raising

(Adds deal and capital raising details from paragraph 3)

By Scott Murdoch and Echha Jain

Dec 11 (Reuters) - Australia's Sigma Healthcare on Monday said it would merge with privately owned pharmacy giant Chemist Warehouse Group to create a A$8.8 billion ($5.79 billion) entity.

Chemist Warehouse will own 85.8% of the merged company that will supply 1,000 Sigma-aligned pharmacies and own 600 Chemist Warehouse outlets, according to a statement.

Chemist Warehouse is a pharmacy and retail chain in Australia known for cheap prices, large stores and major advertising campaigns.

It has long been touted as a potential initial public offering (IPO) candidate but the Sigma deal gives it a backdoor way to being listed on the Australian Securities Exchange (ASX) at a time when global capital markets remain in the doldrums.

The proposed merger has Sigma acquiring Chemist Warehouse in exchange for a stake in the company and A$700 million in cash.

Sigma is raising A$400 million at A70c per share, which is an 8.2% discount to the stock's last closing price on Wednesday before it went into a trading halt.

The capital raising is underwritten by Goldman Sachs and partly underwritten by Sigma major shareholder HMC.

About 572.6 million shares will be issued in the capital raising, which equates to 54.1% of Sigma's existing shares on issue.

Sigma said it had also signed a A$1 billion loan with ANZ Group and National Australia Bank to help fund the deal and cover Chemist Warehouse's existing debt.

The deal requires Australian Competition and Consumer Commission (ACCC) approval and 75% support from Sigma's shareholders. The antitrust regulator has been taking an increasingly tough stance toward approval deals in sectors where competition is already concentrated.

The proposed merger will create savings initially estimated at about A$60 million per annum, expected to be realized after four years.

The aggregate annual historical earnings before interest and tax of the merged company would be more than A$495 million, before synergies, Sigma said.

Chemist Warehouse founders Mario Verrocchi and Jack Gance would hold executive positions on the board of the merged company, Sigma said.

The Sigma board unanimously recommends that shareholders vote in favour of the merger, the company said.

Major shareholders HMC Capital and HMC Capital Partners Fund I would support the proposed merger in the absence of a superior proposal, Sigma said. ($1 = 1.5209 Australian dollars) (Reporting by Echha Jain in Bengaluru; Editing by Maju Samuel, Lisa Shumaker, Mark Porter and Marguerita Choy)