SYDNEY, AUSTRALIA: Wesfarmers Ltd has submitted a non-binding, indicative offer to acquire 100 percent of the shares outstanding in Australian Pharmaceutical Industries (API) for $1.38 per share by way of a scheme of arrangement, a news release said.

The proposal price corresponds to a total equity value for Australian Pharmaceutical Industries (API) of approximately $687 million, based on 498.2 million fully diluted shares outstanding, and represents a premium of 21 percent to the last close price of $1.145 on 9 July 2021; and 22 per cent to the one-month volume weighted average price of $1.133 to 9 July 2021.

Wesfarmers will be seeking the support of the API Board and its recommendation of the Proposal to API’s shareholders.

Australian Pharmaceutical Industries (API) is a leading Australian distributor of pharmaceutical goods and operates a portfolio of complementary wholesale and retail businesses in the growing health, well being and beauty sector.

API provides retail support services to pharmacist-owned pharmacy partners through its Priceline Pharmacy, Soul Pattinson and Pharmacist Advice brands, and is a retailer through company-owned health and beauty stores under the Priceline brand.

In addition, API operates Clear Skincare clinics, a provider of skin treatments, laser hair removal and non-invasive cosmetic procedures, and manufactures pharmaceutical and personal care products through its consumer brands business

API’s major shareholder, WHSP, has entered into an Undertaking Agreement with Wesfarmers and has indicated its support for the proposal. WHSP has agreed to vote its 95.1 million API shares, representing 19.3 percent of API’s shares outstanding, in favour of the proposal and against any competing proposal.

Wesfarmers Managing Director Rob Scott said the acquisition of API would provide an attractive opportunity to enter the growing health, wellbeing and beauty sector.

“If the proposal is successful, API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector.

“The combination of Wesfarmers and API is a compelling opportunity to capitalise on API’s strengths and positioning in these markets while drawing upon Wesfarmers’ capabilities in retail and distribution, our strong balance sheet and our willingness to invest in our businesses for growth over the long term.

“Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules, and considers API’s relationships with its community pharmacy partners to be one of its key strengths. We see opportunities to build on these relationships and invest to expand ranges, improve supply chain capabilities and enhance the online experience for customers. These investments are expected to strengthen the competitive position of API and its community pharmacy partners,” Mr Scott said.

Wesfarmers will finalise its view of the business during due diligence and looks forward to engaging with API stakeholders.

Wesfarmers Ltd share price

58.29 AUD+0.29 (0.50%)today

12 Jul, 4:10 pm GMT+10 ·Disclaimer