Takeover not the right medicine, says Sigma's new chief *...

Takeover not the right medicine, says Sigma's new chief

* Rebecca Urban
* From: The Australian
* June 17, 2010 12:00AM


SIGMA Pharmaceuticals' incoming chief has indicated the troubled group can survive without a takeover, describing last month's tilt by South Africa's Aspen Pharmacare as opportunistic.

Mark Hooper, who is currently chief finance officer at Paperlinx, was yesterday named Sigma's new chief executive.

He previously worked for the group from 2001 to 2006.

Mr Hooper will replace Elmo De Alwis, the drug-maker's long-serving boss who resigned two weeks after reporting a $389 million loss that caused a breach of banking covenants and sent the company's stock diving more than 60 per cent.

The appointment, which comes days before Sigma's annual meeting, was welcomed by the market, as evidenced by the 3 per cent rise in the company's share price.

Keen to instil confidence in shareholders, Mr Hooper told The Australian he would not have accepted the job if he did not believe the company's challenges could be addressed.

"Primarily, it was an opportunity to take a chief executive officer's role," he said.

"I always felt it was a fantastic company in a good industry. I'm very positive the core business . . . can and should be doing better."

Mr Hooper, who has been at Paperlinx for less than two years and may have to forfeit performance rights and share options yet to vest under the company's long-term incentive scheme, conceded he considered the possibility of a takeover when making his decision.

However, he stressed that the Aspen offer remained indicative and non-binding. He said shareholders would hopefully view his appointment as the first step in a plan to turn the business around so it could continue as is, rather than accept an "opportunistic bid" on the table.

Aspen has offered $700m -- or 60c a share -- to acquire the company. While the offer is above Sigma's current price of 49.5c, it is substantially lower than the 90c it was trading at before its financial problems were revealed.

And although Mr Hooper's appointment comes at a time of uncertainty, the company has declined to comment on the terms offered to the executive to entice him to leave his well-paid job.

He earned $652,000 last year for just eight months' work.

Mr Hooper said his new contract contained some protection of his interests in the event of a takeover, but declined to comment on specifics.

A spokesman for Sigma said key elements of the new chief executive's contract would be released in due course.

Sigma's outgoing chairman, John Stocker, described the appointment as "excellent news" for the company, which continues to search for a new chief financial officer. "We have recruited a CEO who will hit the ground running, with a deep knowledge of the company and the industry," Mr Stocker said.

Investment bank UBS said Mr Hooper's employment would provide Sigma with options to refinance and continue as a stand-alone business, which could prompt Aspen to raise its offer.

"Our view is that Mr Hooper is very well-regarded in the pharmacy industry and . . . is seen as somewhat of a turnaround specialist," said UBS analyst Andrew Goodsall, noting his role in Paperlinx's complicated refinancing. The new chief executive is due to start in September.