An iconic Australian pharmacy chain has found a new home alongside a host of other big-name brands in a $760 million takeover deal.
A typical shopping trip is now even more likely to include a visit to the Wesfarmers stable, with the $70b conglomerate set to add Priceline pharmacies to its ownership of Bunnings Warehouse, Officeworks, Kmart, and Target.
Wesfarmers on Monday confirmed it had signed off on a $760m deal for Priceline owner Australian Pharmaceutical Industries (API) after finding itself the last man standing in a months-long pharmacy bidding war.
Wesfarmers boss Rob Scott said the deal was the perfect opportunity to enter Australia’s growing health, wellbeing and beauty sector.
“As we have previously stated, Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules,” Mr Scott said.
“Wesfarmers recognises the importance of strong relationships with our trading partners and we look forward to working closely with API’s pharmacy partners, suppliers and other industry stakeholders.”
The deal still needs to be approved by shareholders and regulators, but it is expected to go through early next year.
It means Wesfarmers’ grip on the Australian retail landscape will tighten once again, with more than 450 Priceline stores to be added to a network that already includes 350 Bunnings Warehouses, about 170 Officeworks outlets, 230 Kmart stores and 280 Targets.
Wesfarmers has also retained a small stake in Coles after splitting the supermarket out in 2019. It used some of those funds to buy lithium miner Kidman Resources.
Shares in Wesfarmers were last trading 1 per cent lower on the ASX at $59.73. The company’s share price has softened since hitting an all-time high of more than $66 in August.
Monday’s update comes after Sigma Healthcare – which owns the Amcal, Guardian and Discount Drug Stores networks – pulled out of the race for API as the likelihood of a Wesfarmers ownership increased.
Wesfarmers had made an initial offer of $1.38 per share for API back in July, and upped that bid to $1.55 per share in September – minus any dividend paid for the 2021 financial year.
Sigma came to the table with a mixed cash-scrip offer equivalent to $1.57 per share, before Wesfarmers exercised its right to buy a 20 per cent stake in the company off Washington H Soul Pattinson.
API directors unanimously recommend that shareholders accept the Wesfarmers deal for $1.55 for each of the shares the Western Australian company does not already own.