Rudi's View | Jun 17 2026
This story features SIGMA HEALTHCARE LIMITED, and other companies.
For more info SHARE ANALYSIS: SIG
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
Are Australian companies better off by not expanding offshore? History suggests otherwise.
By Rudi Filapek-Vandyck, Editor
Shareholders in discount pharmacy chain operator Sigma Pharmaceuticals ((SIG)) received quite the scare last week when media reports surfaced about ambitious management running the ruler over UK’s market leader Boots.
The Sigma share price tells the story, as it rapidly declined from $2.92 to $2.64 by Friday, a drop of -9.50%-plus.
By Monday morning, any prospect of a deal being negotiated had already been kyboshed. That news was worth a recovery of circa 6.4% in the share price.
The unwelcome news reminded local investors about Wesfarmers’ ((WES)) ill-executed expansion in that market, from which AMP Ltd ((AMP)), National Australia Bank ((NAB)), and McMillan Shakespeare ((MMS)), among others, equally had withdrawn with a major F mark in their corporate track record.
It was there that Slater & Gordon ((SGH)) acquired Quindell’s UK legal business in 2015 — and ended up destroying 90%-plus of shareholder value.
Can Aussies Travel?
One of the persistent narratives among Australia’s community of investors is that Australian businesses don’t travel well. When offshore expansion plans are being announced, it’s best to sell and park elsewhere.
Guzman Y Gomez’s ((GYG)) painful retreat from the US can serve as yet another recent reminder, while the UK’s unfulfilled ambitions continue to weigh on Pexa Group’s ((PXA)) share price.
And who can argue with troubled experiences from the likes of ANZ Bank ((ANZ)), Boral ((SGH)), InvoCare, Lynas Rare Earths ((LYC)), Mayne Pharma ((MYX)), Lendlease ((LLC)), Ramsay Health Care ((RHC)), and Telstra ((TLS))?
Australian success stories are often born out of limited competition in local markets dominated by cosy duopolies. The easiest to make mistake is to overpay for a troubled incumbent in an offshore market and then assume the same success formula from Australia can be applied.
Many a disappointed shareholder today doesn’t get overly excited when company management expresses ambition to expand overseas, but there are plenty of success stories too, and they should not be forgotten about.
Offshore Is Not The Abyss
It is estimated more than a third of all revenues reported by ASX-listed companies is from outside the country (more during commodity boom years).
A 2021 study by McKinsey stated nearly half of all ASX100 companies typically generate at least 30% of sales outside of Australia and New Zealand.
That study also concluded increased international exposure typically correlates with higher shareholder returns.
Indeed, companies like Amcor ((AMC)), Aristocrat Leisure ((ALL)), Brambles ((BXB)), Car Group ((CAR)), Computershare ((CPU)), and James Hardie ((JHX)) might not be every investor’s cup of tea, and they are not always in fashion, but today’s share prices are much higher than twenty years ago, and there should be little doubt today’s share prices are higher than if these companies had kept their success formula inside Australia’s borders.
It is my observation Australian investors tend to underestimate how successful many of this country’s businesses have become on the international scene.
The likes of Cochlear ((COH)), Goodman Group ((GMG)), Pro Medicus ((PME)), ResMed ((RMD)), and WiseTech Global ((WTC)) are either the global market leader or among the world’s best in their field of expertise.
This equally applies to Computershare and the others mentioned before that short list.
While we all think about BlueScope Steel ((BSL)) in terms of Colorbond dominating the domestic market for colour-coated steel applications, its key profit growth drivers have alternated in recent years between operations in Asia or in North America.
On my quick assessment, some 22 of the current Top 50 companies on the ASX have significant business offshore.
Among smaller caps, Ansell ((ANN)), Breville Group ((BRG)), Codan ((CDA)), Harvey Norman ((HVN)), Iress ((IRE)), Lovisa Holdings ((LOV)), Megaport ((MP1)), Nick Scali ((NCK)), Nickel Industries ((NIC)), and Premier Investments ((PMV)) spring to mind.
While cycles still apply, and nothing’s ever set in stone forever, in most of these cases the outcome has been net positive for shareholders.
So what’s the difference between success and failure?
Quality Is A Good Starting Point
I bring it down to Quality businesses led by quality management teams. It is possible to ride out a lucky streak for a while in a small pond that is Australia, but you need a lot more to make it internationally.
When I was deeply immersed in my attempts to identify the highest quality businesses on the ASX, it soon dawned upon me most businesses that pass the test are successful internationally.
As such, I regard this as one key characteristic of what makes a high quality business.
And when companies like InvoCare and McMillan Shakespeare fail quite painfully in their offshore ambition, my conclusion is their businesses had been carried by favourable dynamics locally, not so much by exceptional products, great service or outstanding management skills.
This is not a 100% watertight assessment. Wesfarmers, whose high regard among Australian investors I share, made a big slip up when expanding into the UK.
And CSL’s ((CSL)) loss of high quality status is further reinforced by overpaying for the Vifor acquisition.
In Wesfarmers case, I suspect hubris had temporarily entered the C-suite (similar to what has happened to Woolworths Group ((WOW)) on a number of occasions) and some harsh lessons have been learned.
As we recently reported, the conglomerate’s Anko Global brand is now expanding throughout the Philippines and Fiji is targeted next.
Let’s call it an 80/20 rule. Great businesses led by great management (ex-hubris) have an 80% chance of success when moving offshore, and a 20% chance for failure.
If it’s a not-so-great business, reverse the numbers.
Eagers Automotive ((APE)) and NextDC ((NXT)) are among local businesses who’ve recently made their first forays into foreign territories.
Goes without saying, specific industry conditions will determine just as much as management’s execution whether shareholders will benefit in the long run.
Sigma’s UK Execution
Returning to Sigma Pharmaceutical’s abandoned deal in the UK, shareholders’ apprehension is fairly easy to understand.
The tie-in with Chemist Warehouse domestically is still relatively young and there’s limited track record for the current corporate entity on the ASX.
Also, a mooted acquisition price of circa $14bn would be a big undertaking given Sigma’s own market cap is $30bn-plus.
And while a successful expansion in the UK will grow future potential for shareholders, chipping away market share from a troubled incumbent can be just as effective, and with less risk.
Just ask the team at TechnologyOne ((TNE)) that a few years ago walked away from acquiring one of the incumbents in the UK market. I don’t think any of their shareholders is today complaining about that decision.
One extra cause for concern was that Boots is owned by private equity firm Sycamore Partners. Australian investors have had plenty of disappointing experiences with private equity owned businesses.
We rather prefer private equity takes ailing businesses off our hands than trying to flog them off with lots of debt on lean operations.
Sigma Healthcare is owned by the FNArena-Vested Equities All-Weather Model Portfolio.
My curated research and selections: https://fnarena.com/index.php/analysis-data/all-weather-stocks/
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