API - Australian Pharmaceutical Industries

There is a theory going around that WES could, just could, take on API + SIG.

• They have announced they want scale in a new business (talk of $10B healthcare sector; pharmacies plus skincare, vitamins, perfumes and all that paraphernalia.
• they already own 19% of API.
• it probably won't be an ACCC issue, as SIG would have looked into these aspects when looking to acquire API
• Datarooms are set up and players are at the table
• the negative is that it is a new business; do they have the skills to become a big player? Better to acquire API then move on SIG when feeling more comfortable?

API updated the market on its potential takeover on Thursday, saying diligence was done and it was negotiating with its respective bidders.

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Dona Ferentes said:

There is a theory going around that WES could, just could, take on API + SIG.

• They have announced they want scale in a new business (talk of $10B healthcare sector; pharmacies plus skincare, vitamins, perfumes and all that paraphernalia.
• they already own 19% of API.
• it probably won't be an ACCC issue, as SIG would have looked into these aspects when looking to acquire API
• Datarooms are set up and players are at the table
• the negative is that it is a new business; do they have the skills to become a big player? Better to acquire API then move on SIG when feeling more comfortable?

Click to expand...

If WES were to take over API and/or SIG it would lead to better management and lower prices for patients on their prescriptions and for customers on purchases in pharmacies.

The drinkers at the pub will not buy Berocca from Priceline unless they are absolutely desperate.

The Pharmacy Guild which is lead by a Professor may not be too happy, they have the ear of government so it is not a done deal politically.

gg

Wesfarmers is a step closer to snaring target Australian Pharmaceutical Industries after rival suitor Sigma Healthcare dropped its proposal to merge with the owner of the Priceline Pharmacy chain.

A deal with Wesfarmers appears a sure thing, which is likely to be penned ahead of Christmas, and unlikely to run into any regulatory issues.
Wesfarmers has conducted confirmatory due diligence, but is yet to make a binding offer.

The Sigma board led by Ray Gunston said it feels that its merger plan with API is a strong one for all stakeholders, particularly given the $45 million of operational synergies per annum that would be created for both companies shareholders.

“Sigma believed it made economic, commercial and strategic sense to pursue the merger proposal between Sigma and API on the terms we presented,” Mr Gunston said in an ASX statement. “However, after further assessment, and in the context of the competitive bid process with its changing transaction and economic considerations, Sigma has made the decision not to proceed with this current proposal.”

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something about the fat lady?

Just when it looked like Wesfarmers had API all stitched up, Woolworths has stormed the fort with a $1.75 a share indicative bid, which is substantially higher than Wesfarmers’ $1.55 a share agreed deal.

RECEIPT OF NON-BINDING PROPOSAL FROM WOOLWORTHS
TO ACQUIRE 100% OF API
Australian Pharmaceutical Industries (ASX:API)(“API”) today announced that it has received a
non-binding indicative proposal from Woolworths Limited (ASX:WOW) (“Woolworths”) to
acquire 100% of the shares in API by way of a scheme of arrangement (the “Woolworths
Proposal”). The indicative price under the Woolworths Proposal is $1.75 cash per share less the
cash amount of any fully franked dividends of up to a maximum of 5 cents per API share
which is inclusive of API’s final dividend of 2 cents per API share for the financial year ended
31 August 2021.
Woolworths has indicated it would be prepared to proceed with its proposal on terms
substantially consistent with the Scheme Implementation Deed between Wesfarmers and API
dated 8 November 2021 (Wesfarmers SID).
Woolworths has stated it is also willing to explore alternative control transaction structures in
order to provide more certainty for API shareholders, such as a takeover bid with a minimum
acceptance condition of 50.1%.
The cash price of $1.75 per API share represents:
• a 52.8% premium to API’s undisturbed closing share price as at 9 July 2021 of $1.145;
• a 54.5% premium to the one-month volume weighted average price to 9 July 2021
(“VWAP”) of $1.133 per share; and
• a $0.20 per share cash increase over the price currently offered under the Wesfarmers
SID.
The Woolworths Proposal is subject to a number of conditions including confirmatory due
diligence and ACCC approval.
The API Board notes that Woolworths has indicated it supports the current ownership
provisions and location rules which ensure that community pharmacies are well distributed
throughout the community, especially in regional and remote parts of Australia and is not
seeking to change ‒ now or in the future ‒ the pharmacy ownership rules requirements or
location rules.
2 | P a g e
A copy of the Woolworths Proposal is attached to this announcement.
Having reviewed the Woolworths Proposal, and after taking advice from its financial and
legal advisers, the API Board considers that the Woolworths Proposal is reasonably capable of
being valued, implemented and completed in accordance with its terms, and, if completed
substantially in accordance with its terms, be more favourable to API shareholders as a whole
than the Wesfarmers Scheme. For these reasons the API Board has determined that the
Woolworths Proposal is, or is reasonably likely to be, a Superior Proposal as defined in the
Wesfarmers SID.
Accordingly, the API Board has determined to allow Woolworths to undertake confirmatory
due diligence to facilitate a binding offer, subject to entering into an appropriate
confidentiality agreement and agreeing a focused confirmatory due diligence process.
At this stage, API shareholders do not need to take any action in relation to the Indicative
Proposal from Woolworths.
The Board notes that there is no certainty that the engagement between API and Woolworths
will result in a change of control transaction or an offer capable of acceptance by API
shareholders. The API Board has not agreed with Woolworths a binding process or timetable
and intends to discuss these aspects further with Woolworths. The Board also notes that the
Wesfarmers SID includes a matching right in favour of Wesfarmers which is exercisable by
Wesfarmers before API enters into any binding agreement in respect of a Competing
Proposal.
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 WOW and API ( and WES )

since WES is doing a $2 a share capital return , is WES still interested in 100% of API ??

although holding a controlling interest in a company is unusual for WES ( instead of inhaling it all ) one might wonder until an announcement to clarify the current offer

WOW with a controlling interest ( and me still holding ) doesn't appeal to me given their ( lack of ) success with Dick Smith Electronics and the hardware adventure

i had already sold down more than 60% of the inherited holding , so a scrip deal doesn't have much appeal either ( for the WOW offer )

but i guess i will see what happens

So, whoever loses out in this little tug-o-war may be on the hunt for another pharmacy? Is there another one on the ASX?

SIG (up 3%)

... a full line wholesaler and distribution. SIG has pharmacy-led network, including over 1200 branded and independent stores representing the brands Amcal, Guardian, PharmaSave, Chemist King and Discount Drugstores (DDS). The Group also provides dose administration aid and related services through its Medication Packaging Systems business and the supply of medical and allied products through its Medical Industries Australia business.

SIG is the other main player ( listed on the ASX )

i hold that also but a much smaller holding than the API one

SIG did put an offer in for API but walked away , so am guessing there must be other ( unlisted ) players

however sitting on the footpath with a wad of cash in my hand , wasn't my primary aim when i bought either stock ( API or SIG )

i hold some BKL which isn't really in the same niche , but at least the BKL shares are tightly held so far

i did throw a buy order for some FIJ , again not really in the same niche but i was looking at API and SIG as 'safe havens ' ( to my way of thinking )

as breathlessly reported about what is arguably the country’s most powerful lobby group, the Pharmacy Guild.

“The guild also has a number of questions surrounding this bid,” it said in a muscle-flexing statement. “Why is a company with interests in the alcohol, tobacco, gambling and nightclub industries wanting to move into healthcare? How does it hope to convince Australians that it is serious about their health and welfare? How will it ensure the successful community pharmacy model, which is custodian of the PBS (Pharmaceutical Benefits Scheme), is protected and maintained?”

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And then came the kicker: “We look forward to having many conversations with the Woolworths team as well as with Prime Minister Scott Morrison and Leader of the Opposition Anthony Albanese on these important questions.”

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Dona Ferentes said:

as breathlessly reported about what is arguably the country’s most powerful lobby group, the Pharmacy Guild.

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Amazing:
Pharmacy Guild or Pharmacy Guilt?
=> the people who jab teens with covid "genetic therapy" and ensure plenty of prozac and opioids get sold?

for references, by october 2 (last accurate data i got https://www.health.gov.au/resources/publications/coronavirus-covid-19-at-a-glance-2-october-2021) , 1,321have supposedly died from Covid in Australia in the last 2y, median age 84,
but WELL BELOW prescribed drug deaths during that time (and i could not find the latest figures which have significantly increased it seems with lockdowns and people sacking:

"
In Australia in 2016–17, 3.1 million people had 1 or more prescriptions dispensed for opioids (most commonly for oxycodone); about 40,000 people used Heroin; and about 715,000 people used Pain-killers/analgesics and pharmaceutical opioids for illicit or non-medical purposes.

Opioid deaths and poisoning hospitalisations have increased in the last 10 years​

Legal or pharmaceutical opioids (including codeine and oxycodone) are responsible for far more deaths and poisoning hospitalisations than illegal opioids (such as heroin). Every day in Australia, nearly 150 hospitalisations and 14 emergency department (ED) presentations involve opioid harm, and 3 people die from drug-induced deaths involving opioid use.
In 2016, the number of opioid deaths (1,119) was the highest number since the peak in 1999 (1,245 deaths). After 1999, the number of deaths fell to a low of 439 in 2006, then began to climb again.
In 2016, opioid deaths accounted for 62% of all drug-induced deaths. From 2007 to 2016, after adjusting for differences in the age structure of the population, the rate of opioid deaths increased by 62%, from 2.9 to 4.7 deaths per 100,000 population. The increase was driven by an increase in accidental opioid deaths and in pharmaceutical opioid deaths.
"
more on https://www.aihw.gov.au/reports/illicit-use-of-drugs/opioid-harm-in-australia/summary

So moral lessons from your legal corner shop dealers?
Like guns, drugs do not kill, just the useage.. but please no moral grand stand
I wish API and woollies the best

API transaction – update

Wesfarmers Limited notes the non-binding indicative proposal made by Woolworths Limited (“Woolworths”) to acquire Australian Pharmaceutical Industries Limited (“API”), dated 2 December 2021.
Wesfarmers continues to believe that its proposal to acquire API remains in the best interests of API shareholders and stakeholders and that it will significantly benefit community pharmacists and Priceline franchisees.
“Wesfarmers supports the community pharmacy model which allows pharmacists to meet the health and wellbeing needs of their patients and customers. We’re committed to supporting pharmacist owners, many of whom operate small businesses, to grow their pharmacies over time.
This includes growth in prescription medicines, along with growth in services and broader non-prescription health, personal care and beauty products,” Wesfarmers Managing Director Rob Scott said. Under the Scheme Implementation Deed between Wesfarmers and API, Wesfarmers has the right to match any proposal, in the event that it becomes capable of acceptance and is considered superior by the API Board.
Wesfarmers’ intentions in relation to its API shareholding Wesfarmers owns 19.3 per cent of API. Having considered the non-binding indicative proposal made by Woolworths:
• Wesfarmers would vote its existing shareholding and any other API shares that it may acquire against any scheme of arrangement pursuant to which Woolworths would acquire API; and
• Wesfarmers does not intend to accept into any takeover offer made by Woolworths for API. Wesfarmers’ proposal supports community pharmacists and protects API customer data “Since announcing our proposal, we’ve continued to develop our plans for the API business. We have met with and listened to representatives from across the sector and we’re confident our proposal supports community pharmacists and their businesses, for the long-term.
Pharmacists face various competitive pressures and Wesfarmers is uniquely placed to support the growth of community pharmacies including Priceline franchisees,” Mr Scott said.
Wesfarmers notes that key API stakeholders, including community pharmacists and Priceline franchisees, have expressed concern about Sister Club customer data being shared with loyalty programs, where there is significant overlap with product ranges sold in pharmacies. These pharmacists and franchisees highlight the significant product overlap between pharmacies and supermarkets which compete across nonprescription health, personal care and beauty categories.
Wesfarmers demerged Coles Limited in 2018, which is now a stand-alone and independent company, but remains a 50 per cent joint venture partner in Flybuys, the second largest supermarket-anchored loyalty program in Australia, behind Woolworths Everyday Rewards.
In recognition of the competitive overlap between API and supermarkets, Wesfarmers has undertaken to keep all API customer data separate from Coles. This assurance provides API and its community pharmacists, including current and future Priceline franchisees, with comfort that their customer data will be protected from supermarket competitors.
Under its proposal, Wesfarmers will utilise its e-commerce, data and digital capabilities to enhance the API online offer and drive customer engagement, including foot traffic and in-store sales for community pharmacists.

DYOR

i hold WES , WOW and API

but since the deals currently on the table are all cash ( and not a huge chance of the board rejecting both offers ) it is only a matter of how much cash i am holding whilst sitting on the pavement when the deal is done

So, summarising and putting it in a way others will understand, eh @divs4ever , I own WES and hence I'll own API as well soon?

Tough luck, Brad.

not as a standalone share ( for API ) ( as proposed in the offer )

it will be just another branch , like Bunnings , Office-Works , K-Mart etc in the WES final reports

BTW there is no guarantee WES will be the winning offer , WOW could be genuine ( and not just there to annoy the WES management ) and WOW has made over-priced acquisitions before .

i would have preferred the SIG offer which included SIG scrip , but SIG walked away from the battle

now it is possible WES will take controlling interest ( say 30% plus ) of the company and let it run as a standalone , ( as SVW seems to be doing with BLD ) , but that is not the way WES normally operates

as i understand the API deals ( currently on offer ) API shareholders get a wad of cash , and WES or WOW get a more complex business model

since SOL sold it's 19% stake to WES early in this battle i don't see API shareholders putting up an effective resistance to the take-over proposals ( i have several thousand API shares , but even if that was millions i suspect i would still be a minority )

Scheme Approved by Court Australian Pharmaceutical Industries (ASX:API)(“API”) announces that the Federal Court of Australia ("Court") has today made orders approving the scheme of arrangement between API and its shareholders (which is described in the Scheme Booklet dated 14 February 2022), under which WFM Investments Pty Ltd, a wholly owned subsidiary of Wesfarmers Limited, will acquire 100% of the shares in API that it does not already own (“Scheme”). A copy of the Court's orders will be lodged with the Australian Securities and Investments Commission on Tuesday, 22 March 2022, upon which the Scheme will become legally effective. At the same time, API will also request that quotation of API shares on the ASX be suspended from close of trading on Tuesday, 22 March 2022. If API shareholders have any questions about the Scheme, please contact the API Shareholder Information Line on 1300 103 401 (within Australia) or +61 2 9066 4063 (outside Australia) between 8.30 am and 5.00 pm (Melbourne time) Monday to Saturday, excluding public holidays. This announcement is authorised for release by the Board of Directors of API.

DYOR

i hold API

i guess my vote against this wasn't enough ( sigh )

oh well the cash reserves will get a big boost soon ( at least it crystallized a profit )

On April 1st, 2022, Australian Pharmaceutical Industries Limited (API) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between API and its shareholders in connection with the acquisition of all the issued capital in API by WFM Investments Pty Ltd, a wholly owned subsidiary of Wesfarmers Limited.