Sigma Pharmaceuticals Ltd., the unprofitable owner of the Guardian drugstore brand, received a A$707 million ($579 million) takeover proposal, 71 percent more than its market value.
Directors of Sigma, Australia’s biggest drug distributor by market share, are considering the 60 Australian cents-a-share offer, the company said in a statement today. The shares surged 37 percent to 48 Australian cents, valuing Melbourne-based Sigma at A$566 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 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.
“Now that you’ve had the CEO and CFO go, you can pretty much rebuild the thing from scratch,” said Stuart Roberts, a health-care analyst at Southern Cross Equities Ltd. in Sydney, in a telephone interview. 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.
The shares have declined each year since January 2006.
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, according to the company’s website.
The company’s two main businesses are a health-care 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 drugstores and the Herron brand of painkiller products.
Sigma said in March that it renegotiated the terms of a A$300 million three-year loan after breaching conditions.