API offers $727 million for rival Sigma Healthcare

API offers $727 million for rival Sigma Healthcare

Australian Pharmaceutical Industries (ASX: API) has offered its rival Sigma Healthcare (ASX: SIG) $727 million to buy the entire business.

API is hoping to consolidate its position in the face of increased regulatory processes and a more competitive market.

The $727 million takeover represents a premium of 69.4 per cent ot Sigma's last closing price of 40.5 cents.

API already owns nearly 13 per cent of Sigma.

Chairman Mark Smith says the deal will allow API to grow further.

"In the face of slowing revenue growth, projected margin and revenue pressures due to government policy and also increased competition, the managed business would provide scale and volume," says Smith.

"The real benefit of the proposed merger comes from infrastructure and back-office cost savings."

The company intends to retain both companies' retail brands after the deal. API's brand include Priceline Pharmacy, Clear Skincare, Pharmacist Advice, Soul Pattinson Chemist, and Club Premium. Sigma's brands include Amcal+, Chemist King, Discount Drug Stores, Guardian and Pharma Save.

The deal is expected to immediately add to earnings per share and deliver annualised gross cost savings of $60 million by year three of the merger.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Enjoyed this article?

Don't miss out on the knowledge and insights to be gained from our daily news and features.

Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.

Support independent journalism and stay informed with stories that matter to you.

Subscribe now and get 50% off your first year!

Four time-saving tips for automating your investment portfolio
Partner Content
In today's fast-paced investment landscape, time is a valuable commodity. Fortunately, w...
Etoro
Advertisement

Related Stories

“Not our desired outcome”: Telix withdraws from $300m Nasdaq IPO

“Not our desired outcome”: Telix withdraws from $300m Nasdaq IPO

Telix Pharmaceuticals (ASX: TLX), one of the nation’s largest...

CommBank joins new ‘intelligence loop’ to combat SMS phishing scams

CommBank joins new ‘intelligence loop’ to combat SMS phishing scams

In an effort to reduce the number of SMS phishing scam victims...

Stralis Aircraft secures funding to make commercial hydrogen planes a reality

Stralis Aircraft secures funding to make commercial hydrogen planes a reality

Brisbane-based Stralis Aircraft has become one step closer to its a...

‘Gone the long yards’: Luxury boatbuilder Maritimo a stayer in local manufacturing

‘Gone the long yards’: Luxury boatbuilder Maritimo a stayer in local manufacturing

In an era when Australia’s mass-production car industry is a ...