(Updates after new offer) By Wendy Pugh MELBOURNE, Oct 31...

(Updates after new offer)
By Wendy Pugh
MELBOURNE, Oct 31 (Reuters) - Australian Pharmaceutical
Industries Ltd. said on Tuesday rival drug manufacturer
and distributor Sigma Pharmaceuticals Ltd. had raised
its takeover offer for the company by nearly 14 percent to about
A$$643 million ($495 million).
The new bid, received after the close of trade, offered
A$2.50 in cash for each of API's roughly 257 million shares, or a
discount of about 5 percent to its closing price on Tuesday.
API earlier this month spurned an offer of A$566 million, or
A$2.20 a share, from Sigma which was pitched at a discount to its
market value before the bid.
Shares of API, which said in September it had received
informal takeover approaches from several companies, surged as
much as 6 percent at one point on Tuesday on speculation that
another offer was imminent before closing up 2.8 percent at
A$2.62.
Sigma shares fell 3 percent to A$2.58.
"The Board of API will evaluate all its options, including
the updated Sigma proposal, and provide advice to shareholders as
soon as practical," the company said in a statement to the
Australian Stock Exchange.
"At this stage there is no certainty that a formal offer will
be made by Sigma. The company advises that API shareholders
should exercise caution in trading in API shares," it said.
Potential rival bidders identified before Sigma's late second
bid included competitor Symbion Health Ltd. , which has
said it would be interested in any moves to consolidate the
industry.
Shaw Stockbroking analyst Brent Mitchell said there had been
speculation that a bid could be lodged at A$2.72, but a rival
bidder might want to seek API approval to look at the books,
after recent computer-related troubles in its accounts.
"Symbion, if they do come in, are unlikely to bid up too much
without getting inside and having a look," he said.
A Symbion spokeswoman said the company had no comment on the
speculation and had nothing to announce.
Sigma said earlier this month that no terms had been
finalised, but it had proposed a cash offer of A$2.20 a share, or
an all-share or cash-and-shares equivalent.
The offer was 7 percent below API's share price of A$2.36 on
the day the offer was announced.
AllianceBernstein Australia research director Ed Rayner said
Symbion would gain some benefit from a takeover of API by Sigma
as pharmacists would still want two suppliers, and the merged
firm would likely lose some customers.
"It makes sense for Symbion to look at it certainly, but they
probably wouldn't want to get into a bidding war. I don't think
Symbion are that keen on that business," he said.
Private equity firms and supermarket companies have also been
tipped as potential bidders for API. Woolworths Ltd.
said last month it had not approached API, while Metcash Ltd.
said on Tuesday it was not involved in the API battle.
Any offer would have to secure the support of API's 21.5
percent shareholder, investment group Washington H. Soul
Pattinson & Co. Ltd.
($1=A$1.30)
((Reporting by Wendy Pugh, editing by Kim Coghill;
[email protected]; Reuters Messaging:
[email protected]; +613 9286 1421))
Keywords: HEALTH AUSTRALIA API


Tuesday 31 October 2006 21:32:15 AEST