This might help explain the reason for the large...

This might help explain the reason for the large discount:

http://www.theaustralian.com.au/business/industry-sectors/doubts-over-aspens-conditional-bid-for-sigma-pharmaceuticals/story-e6frg97f-1225889024495

SIGMA Pharmaceuticals said today Aspen Pharmacare made a formal bid but lowered its offer to 55 cents a share and put on caveats.

The revised bid for the debt-laden Australian generic drug maker, down from 60c a share, also came with a list of more than 10 conditions, which analysts said raised questions about whether Aspen was serious about the acquisition.

Sigma said Aspen was continuing due diligence following the offer, which reduces the suitor's valuation of the company to $648 million from $707m.

"The Sigma board is considering the proposal and recommends that shareholders take no action at this stage," it said in a statement.

Aspen's new bid came with a shopping list of conditions, including a conditional break fee, no material decline in Sigma's position and continuation of the company's existing major contracts and credit arrangements.

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It also demanded Sigma extend exclusive due diligence to August 2 and agree not to seek out rival bids.

"It seems like a fairly extraordinary list of caveats and exceptions," said an analyst at a major trading house, who asked not to be named.

"I wouldn't expect to see that if they were really committed bidders."

Sigma shares rose as much as 19 per cent to 47c but failed to reach the 55c offer and by mid-afternoon, the company was trading up 11 per cent or 4.5c to 44c.

Shaw Stockbroking healthcare analyst Matthijs Smith said the rise in Sigma's share price today probably indicated that investors had expected Aspen to either walk away from the bid or submit an even lower offer than 55c a share.

He said even though Aspen had made a formal offer, the list of conditions "suggests it doesn't have a hearty appetite" for the deal.

Since Aspen made its original offer in May, Sigma has revealed its generics business continues to struggle, making the company unlikely to meet its full year budget, including a forecast net profit of about $80m.

Sigma shares have been in the doldrums since March 31, when it reported a $389m full-year net loss, including a huge goodwill writedown on its $2.2 billion merger with Arrow Pharmaceuticals in 2005.

It also faces the prospect of an asset fire sale in order to pay creditors $100m by March 31 next year and has been hit by government cuts to generic drug subsidies.

In a rare piece of good news for Sigma, it managed last month to recruit former chief financial officer Mark Hooper as its new chief executive.

Mr Hooper, who takes the reins in September, said at the time he would rather see Sigma continue as a stand alone operation than accept a lowball offer.

The analyst said the reduced offer made this scenario look more likely.

"We would be surprised if the board looked favourably on this deal, particularly now that they've got options in front of them aided by Mark Hooper," he said.