Australian drugs maker and distributor Sigma Pharmaceuticals said today that it is acquiring some pharmaceutical brands and a manufacturing facility from Bristol-Myers Sqibb (BMS) for around $60 million, and seek to raise $297 million through the issue of new shares.

New shares will be issued at $1.02 each under one-for-three fully underwritten renounceable rights issue to fund the acquisition and reduce Sigma's gearing.

The issue price represents a 16 per cent discount to Sigma's closing share price on September 4, 2009.

As per the deal, Sigma will gain the right to make, market and distribute BMS's 15 brands, including Lipostat and Pravachol, in Australia and New Zealand, and will acquire a pharmaceutical manufacturing facility at Noble Park in Victoria.

The company will also have the right to export most of the acquired brands to New Zealand.

Sigma chief executive Elmo de Alwis said the acquisition was consistent with Sigma's strategy of investing in and growing its branded prescription portfolio.

"The acquired brands are well-recognised originator brands with established positions in large market segments," Elmo de Alwis said in a statement.

"They are a strong fit with existing Sigma brands, further broadening Sigma's existing product offering to the pharmacy channel."

Sigma and BMS will also enter into a manufacturing agreement for a period of up to five years, under which Sigma will manufacture certain pharmaceutical products for BMS for distribution overseas.

Sigma said the acquired brand portfolio and manufacturing contracts currently generate annual turnover of about $50 million, comprising $33 million from acquired brands and $17 million from contract manufacturing.

Sigma estimates that the EBITDA contribution from the acquisition in the year ending January 31, 2011 will be $15 million to $17 million.

"The capital raising will assist in funding the acquisition, create a stronger capital structure for Sigma and provide financial flexibility for further growth opportunities," Elmo de Alwis said.

PAT up by 4.9 per cent
The Sigma also announced its preliminary first half results for fiscal 2009.

Its net profit after tax rose 4.9 per cent to $32.2 million compared with the prior corresponding period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell four per cent o $99.1 million, while revenue rose 3.5 per cent to $1.54 billion.

The company said that it maintains its previous guidance of modest growth in net profit for the full year ending January 31, 2010.

Sigma released its preliminary first half financial results ahead of its scheduled release date of September 28, to facilitate the capital raising.

The company said it will now release the results in detail on September 14.

"I am pleased that Sigma has demonstrated its ability to weather the poor economic environment of the past 12 months and to produce an increase in net profit," Elmo de Alwis said.

"As a result of this stable performance, our current intention is to pay an interim dividend per share in respect of half year ended July 31, 2009 at a rate no less than the prior corresponding period (three cents per share), subject to final board approval," he added.