Finance Consumer Priceline owner rejects Bunnings bid

Priceline owner rejects Bunnings bid

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Priceline Pharmacy owner Australian Pharmaceutical Industries has rejected a takeover offer from Wesfarmers.

API on Thursday said the $687 million offer for shares, made earlier in July, undervalued the company.

Wesfarmers, which owns Bunnings and Officeworks, wants to start a healthcare division.

Its $1.38 a share offer was a 21 per cent premium on the July 9 closing price.

However, the API board decided the bid was opportunistic given the impact COVID-19 had on its financial performance.

Temporary store closures prompted API this month to lower its full-year earnings forecast to between $66 million and $68 million.

The company plans to add more Priceline stores after lockdowns, and is placing more focus on strong online sales.

As well as Priceline, the business owns the Soul Pattinson and Pharmacist Advice chemists, and Clear Skincare clinics.

Wesfarmers will still gain a 19.3 per cent stake through buying the stocks of major shareholder Washington H Soul Pattinson.

The deal was revealed when Wesfarmers first pitched its takeover offer.

A Wesfarmers spokeswoman said the offer remained compelling for API shareholders.

API shares were higher than the offer price at 1425 AEST.

They were up 1.77 per cent to $1.43.

Wesfarmers shares were down by 0.31 per cent to $61.36.

There has been increased merger and acquisition activity on the share market since the pandemic began.

Investors have paid less to buy shares in struggling companies. This has made the latter cheaper takeover targets.