Following months of speculation Australia’s Sigma Pharmaceuticals has finally agreed (in principle) to sell its pharmaceuticals division to South African generics giant Aspen for A$900 million.

The path to marriage for these two groups has certainly taken a few twists and turns, the original bid from Aspen (in May) being subsequently reduced to A$648 million in, but Simga is now urging its shareholders to accept an offer of A$900 million ($804 million), which more than covers Sigma’s net debt of A$785 million.

The pharmaceutical division – comprised of Sigma’s generics, consumer, over-the-counter, Herron Pharmaceuticals, ethical products, medical products, orphan and manufacturing businesses – is being sold at a price around 12 times its projected earnings (before interest and taxes) for the current financial year, but the deal still remains subject to a number of conditions, including shareholder and regulatory approvals.

Other elements of the pact include: Sigma having a long-term preferred supplier status with the pharmaceuticals division consistent with existing arrangements; Aspen supporting Sigma’s existing pharmacy sales programmes and providing contract manufacturing services; and Sigma providing wholesaling, distribution, information technology and logistics services to the businesses acquired.

Explaining the decision to accept Aspen’s offer, Sigma’s chairman Brian Jamieson, said the firm had considered a number of expressions of interest in relation to purchasing the whole group or certain components, but ultimately concluded that Aspen’s proposal to acquire its pharmaceutical unit is the “best alternative” for shareholders.

“Sigma will emerge after the sale in a financially powerful position for future growth and business improvement under the company’s new management team led by Mr Mark Hooper,” he said.