announcement stock adjustment, page-8

re: a value buy. l think API new management have taken the opportunity to write of stock etc to make future performance look better, and they are clearly not interested in the Sigma deal, so if they can turn the company around over the next 6 months it should work out best for all concerned, but who knows what will happen next;

article;

"SYMBION Health could capitalise on rival Sigma's second failed bid for the embattled Australian Pharmaceutical Industries, after protracted talks between the two parties collapsed.

Sigma, which was thwarted by the competition watchdog in its attempts to merge with API in 2002, terminated its proposed $566 million takeover for the drug distributor and retail pharmacy operator after the API board rejected the offer.

API managing director Stephen Roche said the board believed the company was worth more than Sigma's $2.20-a-share offer and was now in talks with "other interested parties" who might pay more.

These parties are believed to include Symbion Health, which held discussions with API in the middle of the year. Private equity is also said to be interested.

But analysts have questioned whether API is worth more than $2.20 a share. UBS told its clients it remained "concerned with the underlying API business", with potential cash-flow problems placing pressure on the stock.

API slid another 8¢ to $2.25. The stock has lost 10 per cent of its value in the past week. But Mr Roche — who last week downgraded API's forecast for the first half of the financial year and said it would incur one-off losses of $24 million during the half — insisted the board was not readying API for sale.

"We are not shopping around, we're not dressing the business up for something to occur," he said. "We are simply dealing with the whole issue of them coming to us, like the Sigma process, and we are dealing with them through our advisers as necessary.

"We are continuing discussions (with other parties), they are at an adviser level and they're not at a point where the board should consider them."

Symbion chief executive Robert Cooke said his company was in a better position to make a decision about a possible takeover bid for API and capitalise on up to $40 million of cost benefits.

"We have a bit more certainty now," Mr Cooke said. "Obviously API have corralled a price they want and we're in a better position to make a decision about what we can and should do in the coming weeks."

But Sigma is not ruling out a merger with API, with chief executive Elmo de Alwis saying he was prepared to listen if API was prepared to engage at his price, revised down from $2.50 a share after last week's downgrade.