South Africa-based Aspen Pharmacare and Australian firm Sigma Pharmaceuticals have tentatively shaken hands on an acquisition deal that would see Aspen buy Sigma’s pharmaceutical division for A$900 million (about $824 million) in cash. The companies have been batting a potential deal back and forth since Aspen first approached Sigma in May, but the latter wasn’t happy with Aspen’s original A$0.55 ($0.5) per share offer that covered the takeover of both its pharmaceutical division and its wholesaling business. Under terms of the new deal Sigma will retain its healthcare division, which includes the wholesale and retail businesses. Aspen admits it doesn’t have the relevant experience needed to optimize the wholesaling business and says Sigma is far better positioned to keep this part of the firm prosperous.
Given Sigma’s retention of its wholesaling operation, the new deal provides that the firm will enjoy long-term preferred supplier status with the pharmaceutical division, and provide wholesaling, distribution, information technology, and logistics services to the acquired businesses. Aspen will in turn support Sigma’s existing pharmacy sales programs and provide contract manufacturing services.
Sigma’s pharmaceutical business comprises the manufacturing and marketing of a range of pharmaceutical products. It recorded sales revenues of A$671 million ($614 million) in the year ended January 31. The firm claims to be Australia’s largest pharmaceutical manufacturer, with its generics range currently holding about a 25% share of the Australian generics market.
Aspen already has an Australian operation that recorded revenues of some A$180 million ($165 million) in the year to June 30. The firm says acquiring Sigma’s pharmaceutical business will open new doors into the Australian generics and OTC markets, provide a foundation for further development of its business in the Asia Pacific region, and add Australian manufacturing capabilities to its global manufacturing operations.