In July, Wesfarmers made an unsolicited bid for Australian Pharmaceutical Industries (API), the parent company of Priceline and Soul Pattinson pharmacies. The $687 million offer by one of Australia’s largest companies was widely viewed as opportunistic.

Two months later, Sigma Healthcare, the largest pharmacy network in Australia with 1200 branded and independent stores including Amcal and Guardian, topped Wesfarmers offer by two cents a share in a cash-and-scrip deal potentially worth $774 million.

Wesfarmers upped the ante again in early October by acquiring a 19.3 per cent stake in API. Last Friday, Sigma decided not to proceed with its offer.

Wesfarmers has announced it will acquire 100 per cent of API’s shares in a buyout worth $764 million. The owner of Bunnings, Coles, Kmart and Officeworks, Wesfarmers posted sales of $30.75 billion in 2020 and has long been eyeing the $25 billion Australian pharmacy market.

Priceline and Priceline Pharmacies will be a jewel in the multinational’s crown as one of Australia’s largest pharmaceutical and beauty retailers, operating 420 stores nationwide.

Rob Scott, Managing Director of Wesfarmers, reiterated earlier statements that the company supports the current API business model and the takeover is a key opportunity to enter the health, wellbeing and beauty sector.

“Wesfarmers continues to see opportunities to invest and strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers”, he added.

The pharmacy sector accounts for the largest share of the Australian beauty market at 19 per cent, followed by supermarkets at 12 per cent. As the owner of Coles, one of the big two supermarket chains, Wesfarmers will have a greatly expanded footprint in the cosmetics category and increased synergies.

Pending regulatory approval, the deal will be finalised early next year.

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