Wesfarmers to control API after Priceline owner investors back $763m takeover

Wesfarmers is set to control API after shareholders of the Priceline owner overwhelmingly back the WA-based conglomerate’s takeover bid.

Wesfarmers chief executive Rob Scott has thanked API’s board and shareholders for supporting the scheme. Picture: Colin Murty.

Shareholders of Priceline owner Australian Pharmaceutical Industries have overwhelmingly backed a $763m takeover from Wesfarmers.

More than 86 per cent of shareholders voted on the scheme, with 96.9 per cent voting in favour to fold API into Wesfarmers’s empire which includes Bunnings, Kmart, Target and Officeworks.

The takeover, priced at $1.55 a share, is now subject to approval from the Federal Court, which is scheduled to consider the deal on Monday. If all goes to plan, Wesfarmers will be handed the keys to API on March 31.

Wesfarmers chief executive Rob Scott thanked API’s board and shareholders for supporting the scheme.

“API provides an attractive opportunity for Wesfarmers to enter the growing health, wellbeing and beauty sector, and we are looking forward to working closely with API’s pharmacy partners, suppliers and other industry stakeholders,” Mr Scott said.

“Today’s approval of the Scheme by API shareholders is an important milestone and completion of the transaction is expected to take place later this month, subject to final Court approval.”

It comes after a three-pronged fight for API, with Wesfarmers edging out rival pharmacy distributor Sigma and grocery giant Woolworths.

Last week, influential proxy advisors backed Wesfarmers’ bid, saying it was “attractive premium”.

“The offer price is well above the company’s recent trading price, although noting that it is below the trading prices of near $1.73 in the period that Woolworths’ non-binding offer was on the table,” Institutional Shareholder Services wrote in a report.

“Prior to this, API shares have not traded above the offer price since December 2018.”

Wesfarmers first approached the company in July, offering $1.38 per share. It said it had entered an agreement with Washington H. Soul Pattinson, API’s largest shareholder, to acquire its 19 per cent stake in the pharmacy operator.

After that bid was rejected, Wesfarmers increased its offer to $1.55 per share. But Sigma Healthcare – which runs the Amcal and Guardian chemist chains – in September made a bid that had an implied value of $1.57 per share. But this was partly scrip, which would have meant API shareholders owned 48.9 per cent of the combined group, attracting criticism from Sigma’s biggest shareholder Allan Gray.

Sigma later withdrew that offer after Wesfarmers indicated it would vote its 19.3 per cent stake against it. It warned Woolworths it would do the same after the retailer made a higher bid in December, a proposal withdrawn the following month.

In February, the Australian Competition and Consumer Commission said it would not oppose the acquisition of API, which owns several pharmacy chains including Priceline and Soul Pattinson Chemist.