Overview of Paragon Care Limited and CH2 merger announcement

Paragon Care Limited (ASX: $PGC) has announced a general meeting to be held on June 3, 2024, to consider and vote on six resolutions in connection with a proposed merger with CH2. The resolutions include the issue of consideration shares, approval of performance rights, waiver of vesting conditions, and proposed appointments to the board. The company has engaged an independent expert, ShineWing Australia Securities, to prepare a report assessing the fairness and reasonableness of the merger to the shareholders. The report concludes that, in the absence of a superior proposal, the merger is fair and reasonable to the shareholders.

Executive Commentary on the Merger and Future Outlook

The merger with CH2 is a strategic move that will position Paragon Care as a leading healthcare wholesaler, distributor, and manufacturer in the Asia Pacific region. We believe that the combined entity will have a stronger market presence, enabling us to achieve cost efficiencies and leverage synergies between the two organizations. The annual synergies of approximately $12 million from FY26 and the focus on network optimization, shared services, and headcount reduction are expected to drive operational improvements. We are committed to expanding into new markets, cross-selling products, and pursuing inorganic growth opportunities to further enhance shareholder value.

Assessment of Merger and Future Prospects

The proposed merger with CH2 aims to create a leading healthcare wholesaler, distributor, and manufacturer operating across healthcare markets in the Asia Pacific region. The Paragon directors unanimously recommend that Paragon shareholders vote in favor of all resolutions at the meeting, subject to the absence of a Superior Proposal. The Independent Expert has concluded that, in the absence of a Superior Proposal, the merger is fair and reasonable to Paragon shareholders. The merger is expected to result in annual synergies of approximately $12 million from FY26, with a focus on network optimization, shared services, and headcount reduction. The Merged Group plans to expand into new markets, cross-sell products, optimize shared services, and pursue inorganic growth opportunities. Shareholders are encouraged to participate in the meeting or lodge a directed proxy if they cannot attend. The announcement also outlines the risks associated with the merger and the Merged Group, providing a comprehensive overview of the proposed transaction and its potential impact on the company and its shareholders.