(Reuters) - Australian pharmacy operator Sigma Healthcare Ltd’s (SIG.AX) board on Wednesday rejected a A$727 million ($514.5 million) takeover bid from Australian Pharmaceutical Industries Ltd (API) (API.AX), saying it was not in the best interests of shareholders.
Having recently completed a detailed assessment of the proposal, Sigma’s board said in a statement that there was scope for standalone value to shareholders through the cost-cutting measures it had outlined earlier.
“The current API proposal does not reflect the long-term prospects and value inherent in Sigma having regard to the reset cost base of the business and our own growth agenda,” Sigma Chairman Brian Jamieson said.
API owns nearly 13 percent of Sigma. On Wednesday, it said it would review its stake.
“It is clear that API’s non-binding indicative offer to pursue a merger of API and Sigma is unable to be taken forward,” API said.
API had offered to buy the drug distributor in December 2018, with the aim of consolidation in the face of increased competitive and regulatory pressure.
Sigma had engaged in a limited form of due diligence with API since January.
Sigma’s shares dropped about 11 percent while API shed as much as 2.8 percent, amid a weaker broader market.
Reporting by Ambar Warrick and Aby Jose Koilparambil in BENGALURU; Editing by Stephen Coates and Christopher Cushing