Just under two months after rejecting a takeover bid from Wesfarmers (ASX: WES), which Australian Pharmaceutical Industries (ASX: API) described as “opportunistic”, the Priceline owner will let the Perth-based retail conglomerate take a look at its books after receiving a revised offer.
Wesfarmer’s new bid of $1.55 per API share, valuing the company at $764 million, has piqued the interest of the pharmacy giant’s board, which now intends to recommend the takeover offer should a formal bid be placed.
The proposal is just under $100 million more than Wesfarmer’s previous bid launched in July, which was rejected by API’s board but backed by substantial shareholder Washington H. Soul Pattinson (ASX: SOL).
At $1.55 per share, the proposal represents a 35.4 per cent premium to the company’s closing price of $1.14 per share on 9 July.
While the deal is subject to a number of conditions, including satisfactory completion of confirmatory due diligence by Wesfarmers and regulatory approvals, the API board has declared it will recommend the proposal to shareholders.
“This revised offer better reflects the strength and potential of our stable of businesses that have been built by the efforts and passion of all of our people within API. Aligned with our vision of “enriching life”, we remain firmly focused on making a difference for all our customers and trading partners,” API CEO and managing director Richard Vincent said.
As previously announced, API’s major shareholder Washington H. Soul Pattinson has agreed to vote its 19.3 per cent shareholding in API in favour of Wesfarmers’ revised proposal.
Wesfarmers managing director Rob Scott said the new offer would deliver an attractive premium and certain cash return to API shareholders and was consistent with Wesfarmers’ focus on deploying capital in areas where it can leverage its unique capabilities to create long-term value.
“Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules,” Scott 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.
“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.”
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