Sigma Pharmaceuticals (ASX: SIP) says it has now reached formal agreement with Aspen Pharmacare Holdings Ltd group of companies on the terms and conditions of the sale and the ongoing relationship between them. On August 16, 2010, Sigma announced that it had agreed in principle to sell its pharmaceuticals division to Aspen for A$900 million.

Sigma's pharmaceuticals division includes its generics, consumer, OTC, Herron, ethical products, medical products, orphan and manufacturing businesses.

"The board's decision to sell this division to Aspen followed careful consideration of a number of alternatives for Sigma's future, including expressions of interest for the whole of Sigma as well as for specific divisions of the company," Sigma said in a statement.

Mr Brian Jamieson, Chairman of Sigma, said: "The Board considers the sale of the Pharmaceuticals Division to Aspen to provide the best outcome for Sigma shareholders.

"In particular, it enables Sigma to significantly reduce its bank debt, enhancing the Company's financial flexibility; consider capital management initiatives, which could include the payment of a franked special dividend to shareholders; and retain full ownership of the Healthcare Division, which comprises the Wholesale and Retail businesses, in which Sigma is a leading market participant."

Mr Mark Hooper, Managing Director of Sigma, said: "Following the sale, Sigma will focus on business improvement initiatives and organic growth opportunities that build upon the strong relationships with our extensive pharmacy network."

"We will have an ongoing relationship with Aspen, which has the potential to provide a number of benefits. In particular, we have entered into a long-term supply agreement, under which Sigma will act as Aspen's preferred distribution partner, and arrangements whereby Aspen will manufacture product for Sigma on an ongoing basis."

The sale is subject to a number of conditions precedent, including Sigma shareholder, lender and regulatory approval. Directors will provide further information on the transaction in an Explanatory Memorandum and Notice of Meeting to be sent to shareholders in the near future.

Sigma expects to hold an Extraordinary General Meeting to consider the sale in mid January 2011.

Subject to satisfaction of the conditions precedent, the transaction is scheduled to complete on 31 January 2011.