Australia's Sigma Pharmaceuticals and grocery wholesaler Metcash are in talks over a joint bid for assets being sold by Primary Health Care, both companies said on Tuesday.
After its A$2.7 billion takeover of Symbion Health ended a year-long battle for control, Primary wants to sell the Symbion pharmacy and consumer business which private equity groups had earlier offered around A$1 billion ($943 million) for.
"Metcash and Sigma are investigating the possibility of jointly bidding for Symbion's consumer brands and pharmaceutical wholesaling assets," Metcash Chief Executive Andrew Reitzer said.
"The pharmaceutical industry's characteristics have changed since we last examined its opportunities, making it more attractive," he said.
Primary, which has said it has received expressions of interest from international and domestic parties, is expected to start accepting formal bids in May.
Private equity firm Archer Capital has said it expressed interest in the whole business while Sigma only wants the consumer unit, which is Australia's largest distributor of vitamin supplements.
A tie-up with Metcash, which could take on the pharmacy unit, could allow it to better compete with bidders wanting to buy the lot.
"We've been discussing with various potential partners," Elmo de Alwis, managing director of Sigma Pharmaceuticals, told Reuters on Tuesday.
"If Metcash are interested in it we are interested in exploring what the opportunities are but that's as far as it's got. We haven't concluded anything, we haven't even concluded that we're going to do it," he said.
The pharmacy business provides wholesales to pharmacies.
Metcash, which operates the IGA distribution business that supplies 2,500 independent Australian supermarkets, has been looking for a new business to add to its wholesale grocery and liquor divisions for some years. In late 2005 it bought wholesaler Foodland Associated for A$1.1 billion.
Archer Capital last year partnered with Ironbridge Capital and private hospital operator Healthscope in a failed bid for Symbion.
Symbion's consumer and pharmacy is expected to be highly sought after as Australia's population ages and the use of private health insurance increases. It grew earnings 37 percent to A$31.5 million in the first-half as it won customers from Sigma and API.
Shares in all three companies fell on Tuesday.