Priceline Owner’s Board Nixes Wesfarmers Buyout Offer
Wesfarmers has hit a snag in its bid to buy out Australian Pharmaceutical Industries, with the Priceline owner’s board unanimously rejecting the retail giant’s proposal.
API was approached by Wesfarmers with a proposal to acquire 100 per cent of its stock at $1.38 per share in a $687 million deal, which has the approval of majority API shareholder Washington H Soul Pattinson.
The board has knocked back the offer, however, citing factors including the “opportunistic timing” of the proposal considering the impact of COVID; the strategic value of API’s assets including Priceline’s Sister Club loyalty program; and the substantial medium-term growth expected in Priceline’s earnings contributions.
“Although API’s share price has recently traded above the price offered in the Indicative Proposal, the Board recognises that the share price may trade below this level in the short term.
“Nevertheless, the Board will only progress a change of control transaction on terms that recognise the fundamental value of API and are in the best interests of API shareholders as a whole,” the API board said in a statement to the ASX.
API is currently staring down a pending class action suit from current and former franchisees, who allege numerous regulatory breaches as well as excessive control.