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Leading drug distributorAustralian Pharmaceutical Industries Ltd (API) offered A$727 million to Sigma healthcare.
API announced its proposal to buy Sigma on Friday, offering A$0.686 per Sigma share, and API shareholders owning 63% of the combined entity if the deal was to go ahead.
API already owns Australia’s leading pharmacy and beauty supply chain, Priceline and Priceline Pharmacy, while Sigma owns lesser-known pharmacy companies Amcal, Chemist King, Guardian and Discount Drug stores.
If the deal was to go ahead, API would own the majority of Australia’s leading healthcare pharmacies. API already owns a 13% share in Sigma healthcare limited.
API says it intends to ensure that it holds strategic options in the future shape of the healthcare industry.
“API’s preference is to take the next steps with Sigma so that all shareholders can share in the benefits of a merged entity. The NBIO is conditional on, among other things, completion of due diligence and ACCC clearance.” API said in a statement.
If an agreement is reached with Sigma it will go through regulatory processes that could run throughout 2019.
API will now await engagement with the Sigma Board to allow the full merger to be reviewed.
Sigma Pharmaceutical shares fall
Sigma Pharmaceuticals Ltd shares have fallen upon the proposed merger, dropping up to 3.5% at time of writing on Friday.
Analysts predict the shares to continue to drop upon the news.
While API shares remained strong and unaffected by the announcement, healthcare stocks were down 0.7% just after open on Friday.