Woolworths moves to take over API
SUPERMARKET powerhouse Woolworths is looking to gazump rival retail giant Wesfarmers with an $872 million bid to acquire pharmaceutical wholesaler, Australian Pharmaceutical Industries (API) (PD breaking news).
The Woolworths non-binding transaction proposal represents a 20 cents per share premium over the price agreed between API and Wesfarmers under the Scheme of Implementation Deed (SID) announced last month (PD 08 Nov).
In a statement to the Australian Securities Exchange (ASX) Woolworths CEO, Brad Banducci, said there was “a compelling strategic rationale to support” its planned acquisition of API, adding it would provide benefits for customers and pharmacists.
“If successful, we will continue to support API’s community pharmacy partners to deliver better experiences for both customers and pharmacists,” he said.
“We will also work to strengthen API’s wholesale and distribution business to ensure Australians continue to have timely, costeffective access to a full range of Pharmaceutical Benefits Scheme (PBS) and other medicines, via their community pharmacy, regardless of where they live.
“We are strongly committed to supporting the community pharmacy model including pharmacy ownership and location rules to ensure pharmacies are well represented in all communities, especially in regional and remote parts of Australia.”
Under an indicative timetable included in the bid, Woolworths aims to commence due diligence on Mon 06 Dec, with the aim of completing the transaction in the second quarter of 2022.
Having commenced trading this morning at $1.50 a share, API stock jumped to a three-year high of $1.71 this morning.
Responding to this morning’s offer, the API Board noted that it was “a superior proposal” to the Wesfarmers’ bid, but stressed “there is no certainty that the engagement between API and Woolworths will results in a change of control transaction or an offer capable of acceptance by API shareholders”.
“The API Board has not agreed with Woolworths a binding process or timetable and intends to discuss these aspects further with Woolworths,” API said in a statement to the ASX.
“The Board also notes that the Wesfarmers SID includes a matching right in favour of Wesfarmers, which is exercisable by Wesfarmers before API enters into any binding agreement in respect of a competing proposal.”
MEANWHILE, the Pharmacy Guild of Australia has raised questions over the “possible implications for community pharmacies and the patients they serve”.
“Why is a company with interests in the alcohol, tobacco, gambling and nightclub industries wanting to move into healthcare?” a Guild spokesperson asked.
“How will it ensure the successful community pharmacy model, which is custodian of the PBS, is protected and maintained?”