Pharmacy wholesaler’s Sigma Healthcare (ASX:SIG)
and Australian Pharmaceutical Industries (ASX:API)
are in talks about a potential merger, weeks after Wesfarmers (ASX:WES)
proposed a take-over bid to API.
Under the proposal, Sigma has submitted a non-binding offer to acquire all shares in API, in which API shareholders would receive 2.05 Sigma shares plus $0.35 cash for each API share held. API shareholders would also have the flexibility of a mix and match option, to elect a maximum cash or shares consideration.
Based on Sigma’s closing price of $0.595 per share last Friday, the proposal implies a value of $1.57 per API share before synergies. API shareholders would own 48.8 per cent of the merger.
The news comes after the retail giant Wesfarmers (ASX:WES)
was granted due diligence on 16th September regarding their bid to acquire all API shares at $1.55 per share. Wesfarmers have until the 16th of October to submit a binding proposal and while the deal has not been finalised yet, Sigma has swooped in and made their own offer.
API has now also granted Sigma due diligence to undertake confirmatory and commence working with Sigma on negotiating and signing binding transaction documentation, including a merger implementation deed.
Sigma noted in their ASX announcement this morning that the merger with API would result in revenue stream, product and customer diversification while the combined entity (MergeCo) will benefit from Sigma’s distribution capability.
Shares in Sigma Healthcare (ASX:SIG)
are trading 3.4 per cent higher at $0.61 while shares in Australian Pharmaceutical Industries (ASX:API)
are trading 5.1 per cent higher at $1.54.