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- Wesfarmers (WES) enters into a process deed to acquire fellow ASX-lister Australian Pharmaceutical Industries (API)
- Back in July the company offered to buy all shares in API for $1.38 each but has since revised its bid to a cash consideration of $1.55 per share
- WES says API’s board intends to unanimously recommend the sale, subject to the parties entering a scheme implementation deed
- Wesfarmers is up 0.90 per cent to $57.16 per share, while Australian Pharmaceutical Industries shares are up 16.5 per cent to $1.48 at 3:21 pm AEST
Wesfarmers (WES) has entered into a process deed to acquire fellow ASX-lister Australian Pharmaceutical Industries (API).
The proposed acquisition would see WES acquire 100 per cent of shares in API by way for a scheme of arrangement for a cash consideration of $1.55 per share.
The revised sale price, follows an earlier proposal by Wesfarmers to buy API for $687 million or $1.38 per share in July.
Accordingly, the latest bid represents a 37 per cent premium to API’s one-month volume-weighted average price of $1.33 per share to July 9, prior to Wesfarmers’ initial offer.
Accordingly, WES says the new arrangement will allow for payment of fully franked dividends up to a maximum of five cents per API share, including any final dividend devalued for the financial year ended August 31, with the cash component of any such cash dividends to reduce to above cash the above cash consideration.
In light of the increased offer, API’s board is reportedly looking to recommend the proposal, subject to the parties entering into a binding scheme implementation deed (SID).
As previously announced, API’s major shareholder, Washington H. Soul Pattinson and Company (WHSP), has agreed to vote its 19.3 per cent shareholding to API in favour of the revised bid.
WHSP has also granted a call option in respect of its API shares in favour of WES.
Wesfarmers Managing Director Rob Scott said the proposed sale would deliver an attractive premium and certain cash return to API shareholders.
“Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules,” he said.
“If the proposal is successful, we see opportunities to invest to strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers.”
Mr Scott said API would also provide the basis of a new healthcare division of Wesfarmers and a platform from which to invest and develop capabilities in the growing health, wellbeing and beauty sector.
Australian Pharmaceutical Industries has granted the company until October 16 to undertake due diligence and negotiate a SID reflecting the new terms.
On Thursday, Wesfarmers was trading up 0.90 per cent to $57.16 per share, while Australian Pharmaceutical Industries shares were up 16.5 per cent to $1.48 at 3:21 pm AEST.
