Citi analysts estimated API would need to lift the bid price to about 73¢ per share from its offer that valued Sigma at 69¢ per share.
Sigma Healthcare (SIP) shares slumped 15% at one stage yesterday after rejected a half-hearted takeover offer from rival Australian Pharmaceutical Industries (API).
This implies a value for the API proposal of 67 cents per Sigma share at close on 12 March 2019 - which would be a 12% decline in offer value to shareholders, Sigma observed.
Having recently completed a detailed assessment of the proposal, Sigma's board said in a statement that there was scope for standalone value to shareholders through the cost-cutting measures it had outlined earlier.
Sigma chairman Brian Jamieson said he and the board had formed the view the merger was not in the best interests of shareholders.
Sigma also said that the returns to Sigma shareholders under the API Proposal would depend on ACCC approval of the transaction, the successful integration of the two businesses, capturing the proposed synergy benefits, as well as the continued trading performance of both businesses and market trading valuation metrics... implying an execution risk.
"Based on Sigma's publicly disclosed earnings guidance, it is clear that a substantial portion of the claimed $100m cost savings will be offset by lost Chemist Warehouse revenue".
Sigma (ASX:SIG) and API (ASX:API) shares in the past six months.
Sigma has since completed and validated a major business transformation review identifying more than $100 million in cost efficiencies, which Sigma is capable of delivering as a standalone business over the next 18 to 24 months, it says.
The loss of the Chemist Warehouse contract will free up around $300 million cash for further acquisitions to boost "invest in income streams that build off the same infrastructure", Sigma chief executive Mark Hooper said in February.
API shares fell 3.5% to $1.35 yesterday.