Retail conglomerate Wesfarmers has made a $687 million bid at buying up Priceline’s parent company Australian Pharmaceutical Industries — an offer that will net API’s shareholders a 21% premium.
According to Wesfarmers, the deal will provide capital and investment to strengthen API’s competitive position, as well as the position of its community pharmacy partners.
The acquisition would see Wesfarmers take control of Priceline Pharmacy, Clear Skincare, Pharmacist Advice, Soul Pattinson Chemist and Club Premium.
Wesfarmers managing director Rob Scott said the acquisition would also enable the conglomerate to enter the “growing health, wellbeing and beauty sector”.
“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,” Scott said.
“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 business for growth over the long term.”
The transaction will be funded through Wesfarmers’ balance sheet and debt facility, and will be conditional on clearance from the ACCC, approval by the API board shareholders, entry into a Scheme Implementation Deed and the completion of any necessary due diligence.
API has commenced an assessment of the proposal to test if it is in the best interests of its shareholders, though Wesfarmers has already convinced the business’ biggest shareholder — Washington H. Soul Pattinson and Company — to vote in favour of the scheme, should no better option present itself.