Aspen Pharmacare Offers to Buy Australia's Sigma Pharma for $1.23 Billion

Aspen Pharmacare Holdings Ltd., Africa’s largest drug company, offered to buy Sigma Pharmaceuticals Ltd. for about A$1.49 billion ($1.24 billion) in cash and assumed debt to expand in Australia.

Aspen will offer A$0.60 for each of Sigma’s outstanding 1.18 billion shares and assume net debt of A$785 million, the Durban-based company said in a statement to the Johannesburg stock exchange today. Sigma, based in Melbourne, is Australia’s biggest drug distributor by market share.

Sigma lost more than half its value after reporting a full- year loss of A$389 million in March because of goodwill writedowns. Chief Executive Officer Elmo de Alwis announced his resignation two weeks later, Chief Financial Officer Mark Smith quit May 13 and Chairman John Stocker said yesterday he planned to step down. The offer is “subject to numerous conditions,” including due diligence, regulatory approvals and unanimous approval by the Sigma Board, Aspen said.

“The next key milestone will be Aspen’s due diligence,” said Dan Hurren, a health-care analyst at UBS AG in Sydney. “Sigma faces a range of problems both internal and industrywide.”

Sigma’s shares surged 37 percent to 48 Australian cents today, giving it a market value of A$566 million. Aspen fell 2.56 rand, or 3.3 percent, to 74 rand in Johannesburg, valuing it at 31.9 billion rand ($4.05 billion).

Amcal Drugstores

Sigma’s two main businesses are a health-care unit that distributes medicines to pharmacies, and a pharmaceutical division that makes therapies for itself and other companies. It also owns the Amcal brand of drugstores and the Herron brand of painkiller products.

Aspen, which supplies pharmaceuticals to about 100 countries, has been operating in Australia since 2001 and has annualized sales there of A$180 million.

“They understand the Australian market quite well,” said Quinton Ivan, an analyst at Cape Town-based Coronation Fund Managers Ltd. “Sigma looks to be in distress. The offer looks opportunistic.”

To contact the reporters on this story: Mike Cohen in Cape Town at; Simeon Bennett in Singapore at

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