South Africa's Aspen Pharmacare Holdings, lowered its May 2010 takeover offer of A$707-million for Sigma Pharmaceuticals by 8.3 per cent to a highly conditional A$648 million, raising doubts whether Aspen is serious in acquiring the Australian loss-making OTC drugs and prescription pharmaceuticals maker.

In May 2010, Durban-based Aspen, South Africa's largest drug company, had offered to buy Sigma for $A60 cents a share or A$707 million ($579 million). It also offered to take on Sigma's debt of A$785 million. (See: Sigma Pharmaceuticals reveals mystery bidder is South Africa's Aspen Pharmacare) 

But Aspen, which has been conducting due diligence on Sigma since it made its offer in May, today lowered its valuation for Sigma to A$55 cents a share or A$648 million.

Along with the lowered offer, Aspen put a list of ten conditions that included Aspen continuing with its due diligence, provision of finance for the acquisition on satisfactory terms, a conditional break fee, and continuation of the company's existing major contracts and credit arrangements.

It also wanted the exclusivity arrangements extended to 2 August 2010 and did not want Sigma to seek rival bids.

By placing such onerous terms for its takeover offer, analysts are wondering whether Aspen is serious in making the acquisition.

Sigma responded by saying, ''The Sigma Board is considering the proposal and recommends that shareholders take no action at this stage. Sigma expects to make a further announcement in relation to the proposal in due course.''

Croydon, Melbourne-based Sigma is Australia's largest generic drug maker, owning three of Australia's best known pharmacy banner brands Amcal, Guardian and Amcal Max.

Founded in 1912 by two Melbourne pharmacists, Sigma Company Limited changed its name to Sigma Pharmaceuticals Ltd following it's A$2.2 billion merger with Arrow Pharmaceuticals in December 2005.

The company had lost more than half its value after reporting a full-year loss of A$389 million in March. It had its shares suspended from trading for five weeks to 31 March on allegations of accounting irregularities and for making preferential deals with large pharmacy chains at the expense of smaller chemists.

The company had defaulted on debt repayments and creditors were forcing the company to sell off assets in order to pay them A$90 million by 30 November 2009, but subsequently Sigma was able to renegotiate its debts.

Sigma has said in the wake of the loss that it will sell assets and consider other ways to improve shareholder value.

After a wave of top management desertions in May, Sigma last month recruited former chief financial officer Mark Hooper as its new chief executive.