The Sigma Healthcare Ltd (ASX: SIG) share price is pushing higher on Friday. This comes after the company provided an update on the current proposal to merge with Australian Pharmaceutical Industries Ltd (ASX: API).
At the time of writing, Sigma shares are fetching for 56 cents apiece, up 2.75%.
Sigma pulls out of API bidding war
In today's statement, Sigma advised that it has decided not to proceed with the merger proposal of API. It's worth noting that this leaves the door open for Wesfarmers Ltd (ASX: WES) to secure its bid.
In late September, the company submitted a non-binding proposal, offering $1.57 per share to acquire 100% of API. Essentially, this valued the pharmaceutical chain at around $773 million.
The mostly-scrip offer would have seen API shareholders walk away with 35 cents cash and 2.05 Sigma shares for every API share owned.
The Sigma board noted that $45 million worth of annual synergies could be created if the deal went through.
Sigma chair, Ray Gunston touched on the merger proposal, saying:
Sigma believed it made economic, commercial and strategic sense to pursue the merger proposal between Sigma and API on the terms we presented. However, after further assessment, and in the context of the competitive bid process with its changing transaction and economic considerations, Sigma has made the decision not to proceed with this current proposal.
Mr Gunston went on to talk about the company's future, adding:
Sigma remains confident of our growth prospects without a merger with API and the Board and management have continued to focus on longer term growth in our core operations. The Sigma team will keep on working to finalise the completion of our infrastructure upgrade, including our ERP project, and to remain focused on leveraging our infrastructure to create greater shareholder value.
Review on the Sigma share price
Over the last 12 months, Sigma shares have traversed mostly sideways with a few hiccups along the way. Its shares are up just around 5% over the period but are down more than 10% when looking at year-to-date.
Based on today's price, Sigma presides a market capitalisation of roughly $577.31 million, with approximately 1.06 billion shares outstanding.
