Guild says it is ‘monitoring’ the $687 million takeover bid for the wholesaler
The Pharmacy Guild of Australia is “monitoring” Wesfarmers’ unexpected takeover bid for Australian Pharmaceutical Industries for “possible implications”.
Shortly after the bid was announced the Guild put out a statement saying it would keep members informed of developments.
“The boards of both Wesfarmers and API have as a first obligation to act in the interests of their respective shareholders,” a Guild spokesperson said.
“The Guild similarly has an obligation to its members and its members’ patients and it will monitor this bid accordingly”.
Wesfarmers, which numbers Bunnings, K Mart, Target and Officeworks among its many companies, announced the bid first thing on Monday after Washington H. Soul Pattinson (WHSP), which owns 19.3% of API’s share, “agreed to vote in favour of the Proposal and has granted a call option in respect of its API shares in favour of Wesfarmers,” it said in a statement to the ASX.
The “non-binding, indicative offer” to API’s board was to acquire 100% of API’s shares for $1.38 cash per share, “a 21 % premium to API’s last close price”, valuing the company at $687 million.
The WA conglomerate’s managing director Rob Scott said the acquisition of API would form the basis of a new healthcare division for what is now Australia’s second largest retailer after Woolworths.
He said Wesfarmers supported the community pharmacy model, including pharmacy ownership and location rules, and considered “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,” he said. “These investments are expected to strengthen the competitive position of API and its community pharmacy partners.
API’s share price has been hovering between $1.10 and $1.20 since early May, closing at $1.145 on Friday, but news of the bid sent it skyrocketing to closely mirror the Wesfarmer bid valuation.
Wesfarmers said it was “well-positioned to bring capital and unique capabilities” to strengthen API’s competitive position and that of its community pharmacy partners, Priceline, Soul Pattinson and Pharmacist Advice.
API posted two separate documents on the ASX yesterday, one a strategic review and trading update for 2021, the other a confirmation of the Wesfarmers’ proposal.
The trading update cut full-year profit guidance as well as announcing the closure of API’s New Zealand manufacturing and the decision to increase the focus of the company on its pharmacy distribution and two retail businesses, Priceline Pharmacy and Clear Skincare.
It said “the current and recent lockdowns during June and July caused the temporary closure of 72% of the non-pharmacy company-owned Priceline stores, and 75% of the Clear Skincare clinic network”.
In its separate response to the Wesfarmers’ offer it said the API Board was assessing the bid while also noting it “has been made at a time where COVID-19 restrictions have resulted in store and clinic closures and these have significantly impacted on API’s operational performance”.
The deal, which the Australian Financial Review described as “a fait accompli” because of the WHSP support, would be contingent on several elements including approval from the Australian Competition and Consumer Commission (ACCC).