The proposed acquisition of Australia’s Sigma Pharmaceuticals by Aspen Pharmacare Holdings looks to be in jeopardy now that South Africa’s largest generics drugmaker has asked for more time to complete due diligence.

In May, Aspen bid A$707 million (around $590 million) to buy Sigma, which is Australia’s largest generics player but is also struggling with major debts. A confidentiality agreement was signed allowing the Durban-based group to carry out due diligence up to June 25, though that was extended to yesterday.

Now Aspen has advised Sigma that it wishes to continue its due diligence review, sparking fears that a much lower offer (the initial bid involved the assumption of net debts of A$785 million) may be in the offing or that the former will pull out altogether. The Melbourne-based group issued a statement saying Aspen has not made any formal proposal and it will "consider other opportunities that may enable it to improve shareholder value”.

Sigma shares have taken a thumping since the firm issued a profit warning in May after posting record losses for last year in March. Those results led to the resignations of the firm’s chairman, chief executive and chief financial officer and the firm’s stock price, at about A$460-470 million, is currently much lower than Aspen’s bid.

It has also been claimed in the Australian Financial Review, and reported by Bloomberg, that a group of Sigma shareholders plan to sue the company for breach of continuous disclosure and misleading or deceptive conduct,