Wesfarmers motion to buy Priceline owner in $700 million bid

by | Jul 12, 2021

Priceline - Wesfarmers
Wesfarmers, owner of Bunnings, has lobbed a $687 million take-over of Priceline proprietor Australian Pharmaceutical Industries (API).

Announced this morning, the deal could see Wesfarmers create an entire new division committed to beauty, health and wellbeing, should it be approved by competition regulator, ACCC, according to a recent Sydney Morning Herald report.

Wesfarmers has offered $1.38 per share for API which in addition to Priceline, also owns Soul Pattison Pharmacies and Clear Skincare clinics. The offer is a 21 per cent premium on API’s share price, according to the report.

API’s biggest shareholder, Washington H. Spirit Pattison with a 19.3 per cent stake, has publicly supported the bid which is expected to offer crucial support to Wesfarmers.

API’s board recently told investors it was assessing the bid and was yet to decide whether shareholders vote in favour of the proposal.

The bid comes after API reported it was losing regarding $1 million a week from the ongoing Sydney lockdowns and would lose $17 million to $19 million in earnings as a result of COVID lockdowns in June and July.

About 72 per cent of non-pharmacy Priceline shops and 75 per cent of Clear Skincare Clinics have closed after the current round of COVID lockdowns, according to the report.

“The indicative proposal has been made at a time where COVID-19 restrictions have resulted in store and clinic closures and these have significantly impacted on API’s operational performance,” the API board said in today’s statement.

Managing Director of Wesfarmers Rob Scott claimed the buy-out would integrate API’s community pharmacy model with the supply chain as well as the retail network that feeds companies such as Bunnings, Kmart, Target and also online store Catch Group.

Mr Scott said Priceline’s supply chain and online experience would the ownership of the Wesfarmers.

“API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector,” he said in today’s statement.

The purchase will be funded from Wesfarmer’s balance sheet and debt facilities.

Note: In this article the Australian Hardware Journal incorrectly reported that Wesfarmers is the largest shareholder in Coles. Coles was in fact demerged from Wesfarmers into a separately listed company in 2018. Wesfarmers initially retained a stake of 15 percent which has since been progressively reduced to 4.9 percent. The article has been edited to correct this.