Retail and hardware conglomerate Wesfarmers has lobbed a $687 million surprise takeover bid for Australian Pharmaceutical Industries, which owns the 420-strong retail chain Priceline Pharmacy.
The bid was announced on July 12 and includes an 18.7 to 20.5 percent premium on the share price of the group.
Sales from the group’s physical clinics have taken a battering from COVID-19 lockdowns, which has driven customers online.
Wesfarmers CEO Rob Scott said if the bid were successful, API would form the foundation of a new healthcare division within the conglomerate, from which it could further expand.
“Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules, and considers API’s relationships with its community pharmacy partners to be one of its key strengths,” he added.
Wesfarmers currently owns major Australian retail brands Kmart, Target, Officeworks, and Bunnings.
Rob Nicholls, associate professor of regulation and governance at the University of New South Wales, said Wesfarmers was eyeing off potential growth in the health sector domestically.
“The shift of vaccine manufacturing onshore, and supply chain problems in the sector, suggests that API could be seen as having an upside if pandemic or epidemic conditions last for a significant period,” he told The Epoch Times. “The same is true if there is a shift to local supply for other pharmaceutical products.”
Nicholls noted there were unlikely to be any issues with the Australian competition watchdog or potential supply chain vulnerabilities because, despite Wesfarmers’ size, its existing portfolio does not overlap with the health sector.
“So, supply chain vulnerability is an important issue but strengthens Wesfarmers hands in this regard,” he said. “In my view, the Australian Competition and Consumer Commission will take some interest in this bid but there are no obvious “red flags.”
