(Adds context on deal, shares) March 13 (Reuters) - Australian...

(Adds context on deal, shares)

March 13 (Reuters) - Australian pharmacy operator Sigma Healthcare Ltd's (SIG) board on Wednesday rejected a A$727 million ($514.5 million) takeover bid from Australian Pharmaceutical Industries Ltd (API) , saying it was not in the best interests of shareholders.

Having recently completed a detailed assessment of the proposal, Sigma's board said in a statement that there was scope for standalone value to shareholders through the cost-cutting measures it had outlined earlier.

"The current API proposal does not reflect the long-term prospects and value inherent in Sigma having regard to the reset cost base of the business and our own growth agenda," Sigma Chairman Brian Jamieson said.

API had offered to buy the drug distributor in December 2018, with the aim of consolidation in the face of increased competitive and regulatory pressures.

Sigma had engaged in a limited form of due diligence with API since January.

API could not be immediately reached for a comment. Sigma's shares dropped as much as 3.8 percent in early trade while API shed about 0.7 percent, amid a weaker broader market.