Wesfarmers-backed API has upped its takeover bid for Silk Laser to win board support

Wesfarmers-backed API has lifted its takeover bid for Silk Laser to win over board support and further push the conglomerate’s dream to be a major player in the health space.

Shares in cosmetic group Silk Laser rocketed 18 per cent after it signed a scheme implementation deed with Wesfarmers-backed Australian Pharmaceutical Industries, after the conglomerate with an increasing taste for health businesses matched a rival $180m bid worth $3.35 a share.

Shares in Silk Laser were up 18 per cent at $3.32 and the renewed and higher bid from Wesfarmers could be enough to knock out the rival Hong Kong suitor for the ­operator of a chain of clinics that offers cosmetic and skin treatments.

There had been a tussle for Silk Laser as Wesfarmers attempts to build up its health division and saw its original takeover bid for Silk briefly topped by a ­little-known Hong Kong firm.

Wesfarmers in April had offered $3.15 a share, before Hong Kong’s EC Healthcare trumped it with a $3.35-a-share, or $180m, offer in May.

Silk’s board has now been won over by the Wesfarmers bid and has unanimously recommended the offer in the absence of a superior proposal and subject to an independent expert’s assessment.

“The API offer provides certainty for shareholders, and we have been pleased with the alignment between the businesses seen through due diligence,” Silk chairman Boris Bosnich said.

Wesfarmers bought API for almost $800m last year – after it also faced a counter bid for that business from Woolworths – and has since set about building a new health division targeting the $40bn health, medical and beauty sector that will sit alongside its ­retail, chemicals and industrial businesses.

In May Wesfarmers chief executive Rob Scott said he could see Wesfarmers Health emerge as a key earnings generator for the group one day.

“Anything is possible. When we made the investment in health we really thought about this as a 10-year type of runway and obviously we would like to see some improvements delivered over a shorter period of time,” he told The Australian at the time.

“We see there are opportunities to make healthcare in Australia more accessible, more affordable and better leveraging the network of communities pharmacies we have together with digital platforms.”

On Monday Wesfarmers Health managing director Emily Amos said the acquisition of Silk would complement the division’s existing Clear Skincare Clinics, “providing scale and efficiency benefits through an expanded presence in the attractive and growing market for aesthetics products and services”.

“Wesfarmers Health’s acquisition of Silk would provide Silk franchisees and business owners with the benefits associated with being part of a broader healthcare, wellness and beauty network and access to capital to support future growth,” Ms Amos said.

“The due diligence process highlighted strong operational and cultural alignment between our businesses and, should the scheme be successful, we look forward to working with the Silk team and Silk’s franchise partners to support their customers and deliver continued growth.”

Silk is one of Australia’s largest specialist clinic networks, with 53 clinics across Australia offering a range of non-surgical aesthetic products and services. Its core ­offerings are laser hair removal, cosmetic injectables, skincare services, body contouring and fat ­reduction services, and owned brand skincare products.

It was co-founded by its current chief executive, Martin Perelman, in Adelaide in 2009.

Wesfarmers believes the total addressable market for healthcare, health and beauty was as much as $19bn, medical clinics and laser treatments $3bn, and digital health could have an addressable market of as much as $4bn.