Hot Field In Running For Primary Prizes

Sydney Morning Herald

Wednesday April 23, 2008

Ari Sharp

THE battle for the pharmaceutical and consumer divisions of Primary Health Care is shaping as a Melbourne Cup field, with up to 15 parties, including three consortiums, likely to make a bid.

The global pharmaceutical giants Wyeth and GlaxoSmithKline are believed to have expressed interest in bidding for the Primary off-cuts, as has the health-care company McKesson. The private equity firms Kohlberg Kravis Roberts, which owns the British pharmacy chain Boots, and Private Equity Partners are also in the running before the close of bids next month.

The pharmaceutical and consumer divisions, which were taken on by Primary as part of its takeover of Symbion Health, could be sold together or separately, a source close to Primary said. "The diversity of interest is even broader than we anticipated: it's domestic, it's global, and it's strategic. This is shaping up as a very keenly fought auction process," the source said.

The drugs maker Sigma Pharmaceuticals and consumer goods distributor Metcash are in talks about a joint bid, and yesterday Metcash's chief executive, Andrew Reitzer, said the company was in a strong financial position to make a bid with Sigma.

"We have a strong balance sheet and unutilised funds," Mr Reitzer said.

The split between the two would involve Sigma taking the consumer division, to add to its network of chemists, and Metcash taking the wholesale pharmaceuticals division, which fits within its distribution capabilities. Metcash closed down 2c at $4.10 while Sigma was up 5c at $1.17.

Bids close in the middle of next month and a shortlist of bidders will then be invited to conduct full due diligence. A final outcome is expected by early July, although Primary has some breathing space because its bridging finance does not expire until next March.

The nearly 15 parties that have expressed interest in bidding are believed to include three consortiums, four or five parties looking to buy both divisions, and a series of other parties seeking just one of the divisions.

Primary closed up 5c at $6.20.

© 2008 Sydney Morning Herald

Back to News Index | Back to Home