Sigma in $870m takeover offer from mystery bidder

SYDNEY: Sigma Pharmaceuticals, the unprofitable owner of the Guardian pharmacy brand, has received a A$707 million ($870 million) takeover proposal, 71 per cent more than its market value.

Directors of Sigma, Australia's biggest drug distributor by market share, are considering the A60c a share offer, the company said yesterday. The shares surged as much as 44 per cent to A50.5c, valuing Melbourne-based Sigma at A$595 million.

The unidentified bidder is targeting a company that lost more than half its value after reporting a full-year loss of A$389 million in March because of goodwill writedowns.

Chief executive Elmo de Alwis announced his resignation two weeks later, chief financial officer Mark Smith quit on May 13 and chairman John Stocker said on Thursday he planned to step down.

"Now that you've had the CEO and CFO go, you can pretty much rebuild the thing from scratch," said Stuart Roberts, a healthcare analyst at Southern Cross Equities in Sydney. Roberts has a "speculative buy" rating on Sigma. The bidders "are coming in at a point where it's not getting any worse," he said.

Company executives didn't immediately return calls requesting comment. Sigma recommends shareholders take no action at this stage and said it will make a further announcement in due course.

Founded in 1912, Sigma merged with Arrow Pharmaceuticals in 2005 to tap demand for generic medicines.

The company's two main businesses are a healthcare unit that distributes drugs to pharmacies, and a pharmaceutical division that makes drugs for itself and other companies. It also owns the Amcal brand of pharmacies and the Herron brand of painkiller products.

Sigma said in March it renegotiated terms of a A$300 million three-year loan.

- BLOOMBERG