The parent company of some of Australia's leading pharmacies, Sigma Healthcare (ASX: SIG), has rejected a takeover proposal from Australian Pharmaceuticals Industries (ASX: API).
In December 2018 API offered $727 million to buy the entirety of Sigma Healthcare. Sigma is the parent of leading Australian pharmacies Amcal, Chemist King, Discount Drug Stores, Guardian, and PharmaSave.
Sigma has announced today that the board does not recommend the takeover offer to its shareholders.
The company's board says that after looking into the potential of Sigma following a major business transformation review it is not in the best interests of Sigma shareholders to vote in favour of the takeover.
Sigma says that the business transformation review has identified cost efficiencies of over $100 million that are deliverable by Sigma if it remains a standalone business.
The board says this $100+ million in savings are separate to the $60 million of cost synergies identified by API during the due diligence process.
Sigma chairman Brian Jamieson says there is a bright future still for Sigma.
"The board is confident that after thoroughly assessing the outlook of Sigma on a standalone basis, the current API proposal does not reflect the long-term prospects and value inherent in Sigma having regard to the reset cost base of the business and our own growth agenda," says Jamieson.
"Therefore, after considering the API Proposal in detail, we believe it is not in the best interests of our shareholders."
Sigma also highlighted the fact that since API lodged its proposal to takeover Sigma its shares have declined over 15 per cent, representing a 12 per cent decline in offer value to shareholders.
Shares in Sigma are down 3.28 per cent to $0.59 per share at 10.35am AEDT, and shares in API are down 0.93 per cent to $1.39 per share.
Business News Australia
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