Australia's Sigma, API Talking; No Marriage Yet

30 January 1995

Two arch rivals in the Australian pharmaceutical wholesaling sector, the Sigma Group and Australian Pharmaceutical Industries, have denied that a merger has been agreed, but have at the same time confirmed that they have been in talks. Sigma has said that "reports of a merger of the businesses are premature." It added that a merger would require regulatory approval, including that of the Trade Practices Commission, which has not been approached by either company.

Nevertheless, talks are continuing, Sigma reiterated. And according to Melbourne-based newspaper The Australian, a merger would create a major drug wholesaler on the scale of market leader F H Faulding (with a 42% market share compared with 21% for API and 19% for Sigma), with revenues of over A$1 billion ($763.4 million). It adds that the market has been anticipating a marriage between the two companies, but discussions have been longer than expected.

The Australian also recalls that in 1993 Sigma and API had merger discussions with QDL (which has a 13% wholesale market share), which came to nothing, and Faulding subsequently made a takeover bid for QDL which also stalled when it was seen as being uncompetitive by the TPC.

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