API - Australian Pharmaceutical Industries

[Dona Ferentes]

This may well be shaping up as the Battle of the Conglomerates.

SOL couldn't make a go of it. Am pretty sure they had a bigger holding before and have been selling down. So, I wonder what WES thinks it can bring? Some PPE from Blackwoods? Some insights from Catch?

And the elephant in the room is the imminent listing of Chemist Warehouse, the cost cutters par excellence

 

[greggles]

WES makes an unsolicited, conditional bid for API at $1.38 per share. WES has gotten SOL on board to back them in getting shareholder support for the proposal.

Wesfarmers has informed API that it has entered into an agreement with API’s shareholder, Washington H. Soul Pattinson and Company Limited (“WHSP”), which holds a 19.3% interest in API. In the absence of a superior proposal as determined by the API Board, the arrangement includes an undertaking to vote in favour of the Indicative Proposal (or an improved proposal from Wesfarmers). The agreement also includes an option for Wesfarmers to acquire WHSP’s shares in the event Wesfarmers intends to match or exceed any competing proposal which API receives.

Opportunistic, lowball offer from WES. I think they will end up increasing the price if they really want API as I don't think most shareholders will go for it at $1.38.

 

[Dona Ferentes]

WES makes an unsolicited, conditional bid for API at $1.38 per share.. Opportunistic, lowball offer from WES. I think they will end up increasing the price if they really want API as I don't think most shareholders will go for it at $1.38.

People happy to sell it at $1.37 this morning.

Institutional holders will sell. With the SOL option in WES pocket, it is unlikely a 'superior proposal' will emerge.

 

[Dona Ferentes]

Wesfarmers Managing Director Rob Scott said the acquisition of API would provide an attractive opportunity to enter the growing health, wellbeing and beauty sector.

If the Proposal is successful, 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.

The combination of Wesfarmers and API is a compelling opportunity to capitalise on APIs strengths and positioning in these markets while drawing upon Wesfarmers capabilities in retail and distribution, our strong balance sheet and our willingness to invest in our businesses for growth over the long term.

Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules, and considers the API relationships with its community pharmacy partners to be one of its key strengths. We see opportunities to build on these relationships and invest to expand ranges, improve supply chain capabilities and enhance the online experience for customers. These investments are expected to strengthen the competitive position of API and its community pharmacy partners, Mr Scott said.

and I think there's the nub. WES will lobby hard to keep the current model, probably more successfully than SOL. Whereas I'd imagine Chemist Warehouse would be seeking open slather, before their putative IPO gets to being priced.

 

[UMike]

WES makes an unsolicited, conditional bid for API at $1.38 per share. WES has gotten SOL on board to back them in getting shareholder support for the proposal.
Opportunistic, lowball offer from WES. I think they will end up increasing the price if they really want API as I don't think most shareholders will go for it at $1.38.

Most long termers wouldn't.

Was dragging it's feet around the $1.1 level just too long for me to confidently get back into them. If I had I'd be exiting now.

 

[Dona Ferentes]

and API had a Strategic Review announced to market (usually ominous)

API Board has decided to increase the focus of the company on its Pharmacy Distribution and two retail businesses, Priceline Pharmacy and Clear Skincare. As a result, API will cease manufacturing personal care and over the counter products in New Zealand and outsource their manufacture. The personal care and over-the-counter ranges that form the Consumer Brands business of API will continue to be a valuable part of API’s branded and private label product offers.

API expects to incur a one-off charge of $24.5 million for plant and equipment, inventory, employee and make good costs.

Chief executive Richard Vincent also downgraded guidance: the company expected full year underlying EBIT between $66 million and $68 million, compared with previous guidance of around $75 million ( underlying EBIT of $56.3 million in 2020 ).

 

[greggles]

People happy to sell it at $1.37 this morning.

Institutional holders will sell. With the SOL option in WES pocket, it is unlikely a 'superior proposal' will emerge.

After giving it some more thought, you're probably right. The long term shareholders that @UMike referred to will probably get shafted as WES looks to be muscling in on API big time and any other potential suitor will realise what they are up against (WES & SOL) and probably figure it's not worth it.

 

[sptrawler]

The problem with API is, they as well as all the other pharmacies are being out muscled by chemist warehouse, WES getting in before they float would be a major concern for the warehouse IMO.
It would be interesting to see a map of where API outlets are, in regard to where WES have a footprint, which would help with logistic synergies.

 

[Dona Ferentes]

The problem with API is, they as well as all the other pharmacies are being out muscled by chemist warehouse, WES getting in before they float would be a major concern for the warehouse IMO.
It would be interesting to see a map of where API outlets are, in regard to where WES have a footprint, which would help with logistic synergies.

The API business model offers a franchise deal to pharmacists, whereas Chemist Warehouse has direct ownership of a chain of pharmacies.

“We’ve been looking at the healthcare sector for many years – looking at where we think there may be some good opportunities for growth, and also areas where we have the capability,” Scott says.

“What we like about this business is that it’s one of three major pharmaceutical distribution companies and we have, obviously, a lot of deep supply chain distribution experience,” said Rob Scott. “They also provide over-the-counter products, not just in the pharmaceutical space, but in the beauty area, through a range of pharmacies, including the Priceline chain."

“We feel that a lot of our retail expertise, digital expertise, product development expertise, can help the pharmacies to be more competitive.”

While WES states it "supports the community pharmacy model, including the pharmacy ownership and location rules", it does have the backup option if things change, with a spread of KMart and Target locations!! Woolworths has held the option for a pharmacy in supermarket model for nearly 20 years, but regulation has prevented any roll-out. And of course, we know the pharmacy advice aspect is only a small part, and definitely not the most profitable, when confronted with the range of fragrances, beauty products, supplements, vitamins etc that these high street and shopping centre outlets offer.

 

[Garpal Gumnut]

The API business model offers a franchise deal to pharmacists, whereas Chemist Warehouse has direct ownership of a chain of pharmacies.




While WES states it "supports the community pharmacy model, including the pharmacy ownership and location rules", it does have the backup option if things change, with a spread of KMart and Target locations!! Woolworths has held the option for a pharmacy in supermarket model for nearly 20 years, but regulation has prevented any roll-out. And of course, we know the pharmacy advice aspect is only a small part, and definitely not the most profitable, when confronted with the range of fragrances, beauty products, supplements, vitamins etc that these high street and shopping centre outlets offer.

Whatever happens this is a good move by WES on a distressed entity.

The Pharmacy Union is headed by a Professor from N.Queensland and they are very powerful by all accounts. So having a franchise system for pharmacies should make the union happy.

gg

 

[divs4ever]

at the end of last month WES was my 4th largest holding and API my 8th

i had been calmly accumulating API especially during the low stretch mentioned above , i liked API for the long term

this deal does NOT suit me , i would prefer to keep holding API , or second best would be a scrip component (more WES would not be a huge problem )

booted out on the sidewalk with a wad of cash ( along with the HSN and YFZ take-over cash ) isn't so good

i have a hard enough time finding a good home for the cash i have in the bank , currently

( sigh )

 

[Dona Ferentes]

Whatever happens this is a good move by WES on a distressed entity.

Mmmm, perhaps not that 'distressed" ? Others may be seeing value, or at least a bit of competition such that WES may have to lift their $1.38 offer. After the bid, it was under but after a few days, some buying to push it to $1.40 and today as high as $1.43.

One fund manager with a stake thinks there might be

API has several significant long-term upside opportunities. The company is the number two player behind Chemist Warehouse in a fragmented retail pharmacy sector, and is adding 10 – 15 pharmacies to its network each year. We believe that over time, an increasing number of independent pharmacies will find it difficult to remain viable businesses, which should enable API to attract more pharmacies to Priceline, increasing the earnings from this division.

One of the ‘hidden gems’ that we believe the market has not recognised is Priceline’s seven million member ‘Sisterhood’ loyalty program. This gives API valuable opportunities to market offers and discounts to Priceline customers, driving bigger basket sizes (the number of items sold in a single purchase) and more repeat business. The loyalty program also represents a strong opportunity to cross-market Clear Skincare Clinics products and services to what is an overlapping customer base.

I suspect WES with its digital strategy, that has a focus on "leveraging data and digital platforms to develop new revenue streams", would be well aware of this element. So, will a higher WES bid arise (possibly/ quite likely if serious), or will others move in (unlikely)?
.
.

( you in the Sisterhood program, gg?)

 

[Garpal Gumnut]

Mmmm, perhaps not that 'distressed" ? Others may be seeing value, or at least a bit of competition such that WES may have to lift their $1.38 offer. After the bid, it was under but after a few days, some buying to push it to $1.40 and today as high as $1.43.

One fund manager with a stake thinks there might be




I suspect WES with its digital strategy, that has a focus on "leveraging data and digital platforms to develop new revenue streams", would be well aware of this element. So, will a higher WES bid arise (possibly/ quite likely if serious), or will others move in (unlikely)?
.
.

( you in the Sisterhood program, gg?)

No, I'm not in the Sisterhood program DF. I checked with my fellow drinkers at the hotel just now and none of them are in it neither.

at the end of last month WES was my 4th largest holding and API my 8th

i had been calmly accumulating API especially during the low stretch mentioned above , i liked API for the long term

this deal does NOT suit me , i would prefer to keep holding API , or second best would be a scrip component (more WES would not be a huge problem )

booted out on the sidewalk with a wad of cash ( along with the HSN and YFZ take-over cash ) isn't so good

i have a hard enough time finding a good home for the cash i have in the bank , currently

( sigh )

A particularly difficult problem @divs4ever. With Covid about to spread nationally to levels seen in Europe last year my guess is that API will fold. Go WES.

Retail is about to be stuffed and the Chemists make most of their moolah from selling Mexican hats, makeup and take off stuff for goyles, retail pharmacy gear and perfume.

gg

 

[divs4ever]

API is more than retail , it is a wholesaler/distributor , but yes this virus will disrupt things for months maybe years

would the chemist franchises deliver ( some do but am not sure it that is legal or just a courtesy for very ill customers )

i guess time will tell , the go-ahead for the takeover is still in the early stages unlike SVW vacuuming up control of BLD already

 

[Dona Ferentes]

API has dropped below the WES offer price. Now $1.36 ; volume nothing exceptional or different

 

[Dona Ferentes]

Wesfarmers has agreed to purchase ASX-listed Australian Pharmaceutical Industries for $1.55 per share, a 22 per cent premium on Wednesday’s closing price in a deal valued at $764 million.

 

[divs4ever]

REVISED NON-BINDING INDICATIVE PROPOSAL FROM WESFARMERS

On 12 July 2021, Australian Pharmaceutical Industries (ASX:API)(“API”) announced it had
received a non-binding indicative proposal from Wesfarmers Limited (ASX:WES)
(“Wesfarmers”) to acquire 100% of the shares in API for cash consideration of $1.38 per
share. This proposal was rejected by the API Board on 29 July 2021.
Today, API announces that it has received a revised non-binding indicative proposal
(“Revised Indicative Proposal”) from Wesfarmers to acquire 100% of the shares in API, by
way of a scheme of arrangement, for cash consideration of $1.55 per share. The Revised
Indicative Proposal provides for the payment of fully franked dividends of up to a maximum
of 5 cents per share, including any final dividend for the financial year ended 31 August
2021. The cash component of any such dividends will reduce the cash consideration
accordingly.
Details of Wesfarmers Revised Indicative Proposal
The Revised Indicative Proposal of $1.55 per share represents a premium to API’s
undisturbed share price (as at 9 July 2021) of:
• 35.4% to the closing price of $1.145 per share on 9 July 2021; and
• 36.8% to the one-month volume weighted average price to 9 July 2021 (“VWAP”) of
$1.133 per share.
Wesfarmers Revised Indicative Proposal is subject to a number of conditions including:
• Satisfactory completion of confirmatory due diligence by Wesfarmers;
• Clearance from the Australian Competition and Consumer Commission;
• Receipt by Wesfarmers of required regulatory approvals;
• Unanimous recommendation of the API Board and a commitment from all API
Directors to vote in favour of the transaction; and
• Execution of a Scheme of Implementation Deed (“SID”).
2 | P a g e
Support for the Revised Indicative Proposal
Following careful consideration and consultation with its advisers, the API Board (the
“Board”) has determined that it is in the interests of API’s shareholders to progress the
Revised Indicative Proposal and allow Wesfarmers to undertake confirmatory due
diligence.
The Board unanimously intends to recommend the Revised Indicative Proposal to
shareholders (at the offer price of $1.55 per share), subject to:
• The parties entering into a binding SID on terms no less favourable to API’s
shareholders than the Revised Indicative Proposal following completion of
Wesfarmers’ confirmatory due diligence;
• No superior proposal being received; and
• An independent expert concluding (and continuing to conclude) that the Revised
Indicative Proposal is in the best interests of API 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’s CEO and Managing Director, Mr Richard Vincent
said.
Next steps
API and Wesfarmers have entered into a Process Deed under which Wesfarmers has been
granted until 16 October 2021 to undertake exclusive confirmatory due diligence to
facilitate a binding offer. A copy of the Process Deed is attached to this announcement.
At this stage API shareholders do not need to take any action in relation to the Revised
Indicative Proposal from Wesfarmers.
The Board notes that there is no certainty that the engagement between API and
Wesfarmers will result in a change of control transaction or an offer capable of
acceptance by API shareholders.
API will continue to keep the market informed in accordance with its continuous disclosure
obligations.
This announcement is authorised for release by the Board of Directors of API.

courtesy of Bell Direct
===============================================================================================

DYOR
i hold both API and WES

i still would have rather i kept API but i suppose this will be a done deal now ( and would have preferred a scrip component since i already hold some WES )

 

[divs4ever]

Proposed merger with API

Sigma Healthcare Limited (Sigma) today announces that is has submitted a conditional non-binding
indicative proposal to acquire 100% of the shares in Australian Pharmaceutical Industries Limited (API), by
way of an API scheme of arrangement (Proposal).
Sigma believes that the rationale for a combination of API and Sigma is highly compelling, with significant
benefits accruing to both sets of shareholders, the industry and other stakeholders. Sigma believes a merged
Sigma and API would result in:
• Revenue stream, product and customer diversification;
• Significant synergies and other efficiencies available for the benefit of both API and Sigma
shareholders and other stakeholders;
• Stronger platform to operate in a changing industry landscape;
• The combined entity (MergeCo) will benefit from Sigma’s best-in-class and modern distribution
capability; and
• Greater scale and balance sheet capacity.
Under the Proposal, API shareholders would receive consideration of 2.05 Sigma shares plus $0.35 cash for
each API share held. API shareholders will also have the flexibility of a mix and match option under the
Proposal where they are able to elect a maximum cash or a maximum shares consideration1
.
Based on the most recent closing price of Sigma shares ($0.595 per share on 24 September 2021), the
Proposal implies a value of $1.57 per API share before synergies. API shareholders would own 48.8% of
MergeCo under the Proposal.
Through work conducted during previous engagement, Sigma has identified at least c.$45m per annum of
potential cost synergies to be available from the combination of the companies, representing a potentially
significant value creation opportunity for both Sigma and API shareholders.
The Proposal allows for the payment of fully franked dividends by API of up to a maximum of $0.05 per share,
including any final dividend for the financial year ended 31 August 2021. The cash component of the
consideration will be reduced by the amount of any such dividend.
Sigma intends to fund the cash component of the Proposal through new debt. Sigma expects the MergeCo
balance sheet will be levered at less than 2.5x net debt / EBITDA upon implementation of the Proposal.
The Proposal is subject to a number of conditions including completion of satisfactory confirmatory due
diligence by Sigma, receipt of necessary regulatory approvals and unanimous recommendation of the API
1 Subject to scale back noting maximum cash and maximum Sigma shares available.
ME_190996941_1
Board and a commitment from all API Directors to vote any API shares they respectively hold or control in
favour of the transaction.
The API Board has considered the Proposal and determined that it is superior to the non-binding indicative
proposal from Wesfarmers announced on 16 September 2021. As a result, API has decided to grant Sigma
access to allow Sigma to undertake confirmatory due diligence and commence working with Sigma on
negotiating and signing binding transaction documentation, including a Merger Implementation Deed.
At this time, Sigma shareholders do not need to take any action in relation to the Proposal. We will update
shareholders and the market in due course noting our ASX continuous disclosure obligations.
Sigma has appointed Goldman Sachs as financial advisor and MinterEllison as legal advisor.
For more information, please contact:
Contact:
Gary Woodford
Corporate Affairs Manager Steve Dabkowski
Sigma Healthcare Limited BlueDot Media
gary.woodford@sigmahealthcare.com.au steve@bluedot.net.au
0417 399 204 | 03 9215 9632 0419 880 486

courtesy of Bell Direct
============================================================================

DYOR

i hold both SIG and API ( and WES )

the scrip offer would suit me better , but SIG and API are held on different platforms , messy but so far the SIG would be better for me ( i have much more API than SIG )

 

[Dona Ferentes]

fat lady hasn't sung yet. Still in the Green Room. SOL will be the decider?


Sigma Healthcare Limited today announces that is has submitted a conditional non-binding indicative proposal to acquire 100% of the shares in Australian Pharmaceutical Industries Limited (API), by way of an API scheme of arrangement.

Sigma believes that the rationale for a combination of API and Sigma is highly compelling, with significant benefits accruing to both sets of shareholders, the industry and other stakeholders. Sigma believes a merged Sigma and API would result in:
• Revenue stream, product and customer diversification;
• Significant synergies and other efficiencies available for the benefit of both API and Sigma shareholders and other stakeholders;
• Stronger platform to operate in a changing industry landscape;
• The combined entity (MergeCo) will benefit from Sigma’s best-in-class and modern distribution capability; and
• Greater scale and balance sheet capacity.

Under the Proposal, API shareholders would receive consideration of 2.05 Sigma shares plus $0.35 cash for each API share held. API shareholders will also have the flexibility of a mix and match option under the Proposal where they are able to elect a maximum cash or a maximum shares consideration1.

Based on the most recent closing price of Sigma shares ($0.595 per share on 24 September 2021), the Proposal implies a value of $1.57 per API share before synergies. API shareholders would own 48.8% of MergeCo under the Proposal.

 

[Dona Ferentes]

Wesfarmers has acquired the 18.3% stake in API held by SOL.

WES will pay $1.38 a share now and owe Soul Patts more later. It has offered $1.55 a share to acquire API and has 10 days left in its due diligence.

This may make it hard for the SIG offer, higher at $1,57 but for cash + scrip, and needing a 75% approval vote to get up.