Australia’s retail firm Wesfarmers eyes pharmacy sector with $509m API bid

Sydney Opera House, Sydney, Australia. Photo by Frans on Unsplash

Australian retail conglomerate Wesfarmers Ltd on Monday lobbed a A$680 million ($509 million) indicative bid for pharmacy chain Australian Pharmaceutical Industries (API), its first foray into the sector.

Wesfarmers, the owner of the Bunnings hardware and Officeworks chains, said API would form the basis of a new healthcare division and give it a base “to invest and develop capabilities in the health and wellbeing sector.”

API shares jumped 20% in early trade after Wesfarmers priced its offer for the parent of the Priceline Pharmacy and Soul Pattinson brands, at A$1.38 a share, a 20.5% premium to API‘s last close of A$1.145 on Friday.

API said it has started assessing the Wesfarmers proposal.

Wesfarmers said API‘s top shareholder Washington H Soul Pattinson Co, which owns 19.3% in the pharmaceutical firm, had entered an agreement with Wesfarmers and indicated its support for the proposal.

The bid comes at a time when coronavirus restrictions have resulted in closures of API‘s stores and clinics, damaging its bottom line and market valuation. It has lost about 7% so far this year, after losing more than 8% in 2020.

API shares have been out of favour in recent months given its underinvestment in its [distribution centers] relative to its peers… and continual COVID-19 pressure impacting the profitability of its retail businesses,” CS analyst Gretel Janu said.

“We believe Wesfarmers is particularly interested in API‘s retail businesses as it looks to enter Health and Wellbeing sector.”

The deal would give Wesfarmers access to API‘s network of retail stores, skincare clinics, and a distribution network of pharmaceutical and healthcare products.

Earlier, API said in a separate filing that it would stop manufacturing personal care and over-the-counter products in New Zealand in a move to simplify its business, and flagged a hit to its earnings for the full-year ending Aug. 31.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
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