Sigma Healthcare Limited (ASX:SIG) made an unsolicited, indicative, non-binding and conditional proposal to acquire Australian Pharmaceutical Industries Limited (ASX:API) from Washington H. Soul Pattinson and Company Limited (ASX:SOL) and other shareholders for approximately AUD 780 million on September 27, 2021. The transaction will be conducted by way of scheme of arrangement. Sigma Healthcare Limited will pay the consideration in the form of combination of cash and scrip. Under the terms of the transaction, API shareholders will receive AUD 0.35 in cash and 2.05 Sigma shares for each API share which implies a value of AUD 1.57 per API share. The cash component will be reduced by up to AUD 0.05 in respect of any fully franked dividends, including any final dividend for the financial year ended August 31, 2021, paid after the date of the proposal. Sigma also intends to offer a mix-and-match alternative to API shareholders, where each API shareholder will be able to choose to maximize cash or Sigma scrip, subject to aggregate caps on each of the two components with a pro-rata mechanism applied for over-subscription. Under the indicative proposal, API shareholders will own approximately 48.8% of the shares in the combined company. Sigma intends to fund the cash component of the transaction through new debt.

The transaction is subject to completion of satisfactory confirmatory due diligence, receipt of required regulatory approvals, including from the Australian Competition and Consumer Commission or the Australian Competition Tribunal, Board of Sigma Healthcare and Australian Pharmaceutical Industries approving entry into the transaction, the execution of a merger implementation deed in mutually acceptable form, unanimous recommendation of the API Board and a commitment from all API Directors to vote any API shares they respectively hold or control in favor of the transaction, approval of API shareholders and Court approval. The API Board has considered Sigma Healthcare Limited's proposal and determined that it is superior to the non-binding indicative proposal from Wesfarmers announced on September 16, 2021. At this stage, Boards stated that shareholders of API and Sigma Healthcare do not need to take any action in relation to the Sigma proposal. The transaction will result in synergies. The Goldman Sachs Group, Inc. (NYSE:GS) acted as financial advisor and MinterEllison as legal advisor to Sigma Healthcare Limited.