UNSOLICITED, NON-BINDING, CONDITIONAL PROPOSAL FROM WESFARMERS

Australian Pharmaceutical Industries (ASX:API)(“API”) today announced that it has
received an unsolicited, non-binding, conditional indicative proposal (the “Indicative
Proposal”) from Wesfarmers Limited (ASX:WES)(“Wesfarmers”) to acquire 100% of the
shares in API by way of a scheme of arrangement.
The indicative price of $1.38 cash per share represents a premium of 18.7% to API’s VWAP
for the 3 months prior to 9 July 2021 and a premium of 20.5% to API’s closing share price on
9 July 2021. The indicative price would be reduced by the value of any dividends or
capital returns declared, determined, proposed, or paid after 9 July 2021.
Wesfarmers has informed API that it has entered into an agreement with API’s shareholder,
Washington H. Soul Pattinson and Company Limited (“WHSP”), which holds a 19.3% interest
in API. In the absence of a superior proposal as determined by the API Board, the
arrangement includes an undertaking to vote in favour of the Indicative Proposal (or an
improved proposal from Wesfarmers). The agreement also includes an option for
Wesfarmers to acquire WHSP’s shares in the event Wesfarmers intends to match or exceed
any competing proposal which API receives.
The Indicative Proposal is subject to a number of conditions including those outlined in
Appendix A.
The API Board has commenced an assessment of the Indicative Proposal.
The API Board notes that its portfolio of pharmacy distribution, health and beauty retail
and skin care businesses have attractive characteristics and are well positioned for growth
in a number of areas including acceleration in online sales from API’s investment in
Priceline Pharmacy’s leading digital offering, and growth in the performance of its Clear
Skincare business as a result of the recent investment in its clinic network. The Indicative
Proposal has been made at a time where COVID-19 restrictions have resulted in store and
clinic closures and these have significantly impacted on API’s operational performance.
The API Board is undertaking an analysis of whether the Indicative Proposal is reflective of
the long-term growth prospects of API and the expected short-term impacts of the
pandemic-related lockdown restrictions. In the meantime, API shareholders should not
take any action in relation to the Indicative Proposal.
There is no certainty that the Indicative Proposal will result in a transaction. If there are
material developments in the future, API will inform shareholders as required under its
continuous disclosure obligations.
The Board of API has appointed Macquarie Capital as financial adviser and Ashurst as
legal adviser in relation to the Indicative Proposal.
2 | P a g e
Appendix A
The Indicative Proposal is subject to a number of conditions, including:
• Satisfactory completion of Wesfarmers’ confirmatory due diligence on API;
• Execution of a Scheme of Implementation Deed (“SID”) containing customary
exclusivity, material adverse change, conditions precedent, prescribed
occurrences, and break fee provisions;
• Unanimous public recommendation of the transaction by the API Board;
• Receipt by Wesfarmers of required regulatory approvals; and
• Clearance from the Australian Competition and Consumer Commission.

courtesy of Bell Direct

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DYOR

i hold API and WES ( in the same portfolio even ) i might even score an extra because Macquarie is assisting in the deal ( i hold MQG 'free-carried' )

well i never expected that from WES let's see what happens next

PS , i also hold SOL and am intrigued that SOL has found the offer tempting

STRATEGIC REVIEW AND TRADING UPDATE
API’S 2021 FULL YEAR RESULTS

Australian Pharmaceutical Industries (ASX:API) today provided an update on its recent
annual strategic review and its anticipated financial results for the year ending 31 August
2021. This update outlines API’s decision to exit its manufacturing operations in New
Zealand allowing API to focus resources and investments on its distribution and retail
businesses.
Strategic Review
Following its detailed strategic review, the API Board has decided to increase the focus of
the company on its Pharmacy Distribution and two retail businesses, Priceline Pharmacy
and Clear Skincare. As a result, API will cease manufacturing personal care and over-thecounter products in New Zealand and outsource their manufacture. The personal care
and over-the-counter ranges that form the Consumer Brands business of API will continue
to be a valuable part of API’s branded and private label product offers.
API’s CEO and Managing Director, Mr Richard Vincent said:
“We anticipate that Consumer Brands will generate in the order of $5 million incremental
earnings before interest and tax (EBIT) per annum after we have wound down
manufacturing in New Zealand by the second half of FY23. By moving to outsourced
contract manufacturing we will generate lower cost of goods and have greater continuity
in product supply, both of which have been impeded by COVID related impacts.
“Taking into account the proceeds from the sale of the plant, we anticipate a net effect
of $24.5 million at the EBIT level. This one-off charge contains the carrying value of plant
and equipment, inventory, employee and make good costs. These items will be largely
non-cash adjustments to API’s result and reported as underlying adjustments, with the
decision to cease manufacturing to result in a positive cash contribution of $9.7 million in
the current year. The cost incurred to cease manufacturing in New Zealand will have no
impact on the likely dividend payment.
“By simplifying our operations and focussing on our two retail-facing businesses it will allow
us to escalate our investment in our digital capabilities and accelerate the initiatives that
will improve our customer experience in both our Priceline Pharmacy and Clear Skincare
networks. I intend to provide more detail on this strategic review, and particularly the focus
on our two retail businesses, at an Investor Day to be held after our FY21 full year results
announcement.
2 | P a g e
Trading update
API advises that the current and recent lockdowns during June and July caused the
temporary closure of 72% of the non-pharmacy company-owned Priceline stores, and 75%
of the Clear Skincare clinic network.
“We said at the half year that absent of enforced trading restrictions, we expected further
improvements in our retail performance in the second half, providing guidance that our
full year underlying EBIT result would be around $75 million. Until the most recent restrictions
began in late May 2021, we were on track to achieve that number with Clear Skincare
recording double digit sales growth, positive like-for-like sales growth in the majority of
Priceline Pharmacy stores, growth in register margins and basket sizes and steadily
improving like-for-likes in CBD stores. It is now clear that we need to revise our forecast to
reflect the impact of the latest enforced closures.
“On the basis that there is a relaxation of the existing COVID-19 restrictions in place
including New South Wales by the end of July 2021 and no new restrictions between now
and our financial year end on 31 August 2021, API now expects its full year underlying EBIT
to be circa $66 million to $68 million, and its reported EBIT to be in the range of $31 million
to $33 million (unaudited). In the event that the restrictions remain in their current form
beyond the end of July the impact is a reduction of approximately $1 million in EBIT per
week of extension.
“The difference between underlying and reported numbers is due to ceasing the New
Zealand manufacturing operations and also includes costs associated with closing a
further nine Priceline company-owned stores as we recalibrate our store network based on
changes to customer foot traffic and ongoing profitability.
“We will continue to actively review each Priceline company-owned store as they
approach end of lease to ensure we have a robust and sustainable network based on the
effect COVID has had on our customers’ working and shopping patterns,” Mr Vincent said.
Progress on Sydney distribution centre development
In addition, API confirmed that the build of its new Marsden Park distribution centre in
north-west Sydney, at a cost of $50 million, remains on time and within budget. It is
anticipated that this highly automated distribution centre will deliver a 20% improvement in
cost per unit with annualised savings in the order of $8 million EBITDA, flowing from the start
of FY23.
API’s full year results for FY21 are scheduled to be announced on 19 October 2021.
Announcement authorised by the API Board.

courtesy of Bell Direct
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DYOR
i hold API

i suppose this will mean very little in the light of the WES offer

Wesfarmers wants to buy Priceline owner

https://thebull.com.au/wesfarmers-wants-to-buy-priceline-owner/

API BOARD REJECTS INDICATIVE PROPOSAL FROM WESFARMERS
On 12 July 2021 Australian Pharmaceutical Industries (ASX:API)(“API”) announced that it
had received an unsolicited, non-binding, conditional indicative proposal (the “Indicative
Proposal”) from Wesfarmers Limited (ASX:WES)(“Wesfarmers”) to acquire 100% of the
shares in API by way of a scheme of arrangement for cash consideration of $1.38 per
share.
The API Board (the “Board”) has carefully considered the Indicative Proposal, including
obtaining advice from its financial and legal advisers.
The Board has unanimously concluded that the Indicative Proposal undervalues API, is not
compelling and is not in the best interests of API shareholders.
In coming to this conclusion, the Board has undertaken detailed analysis of the underlying
value of API, including assessing the medium and long term growth prospects of the
company and reviewing a range of scenarios in relation to API’s recovery from the
impacts of COVID-19 (“COVID”) and the related lockdown restrictions. In particular, the
Board analysis includes the following factors:
• The opportunistic timing of the Indicative Proposal given the impact COVID and the
related lockdown restrictions have had on API’s financial performance over the last 18
months, and particularly on its retail facing businesses.
• API’s portfolio of complementary wholesale and retail businesses are strategically well
positioned in the growing health, wellness and beauty sector.
• The expected substantial medium-term growth of Priceline’s earnings contributions
including:
o Attractive outlook for discretionary health and beauty spending as COVID
restrictions unwind;
o Continued roll out of Priceline Pharmacy franchise stores;
o Strength of Priceline’s digital health and beauty offering, including utilisation of
the recent growth in eScript take-up combined with the Priceline app and store
network to deliver essential medicines direct to home; and
o Benefits of margin improvement and strategic initiatives, including the recent
closure of nine loss making company-owned Priceline stores in CBD locations as
the network is recalibrated into suburban areas post COVID.
• Strategic value of Priceline’s Sister Club loyalty program, Australia’s largest health and
beauty loyalty program, which is fuelling the digital initiatives.
2 | P a g e
• Realisation of the earnings growth anticipated from API’s investment in 39 new Clear
Skincare clinics over the past three years since the business was acquired by API
(representing 47% of the total network) and the continued expansion of the clinic
network.
• The certainty of additional funding provided to the Pharmacy Distribution business
through the remaining four years of the 7th Community Pharmacy Agreement, coupled
with resetting of generics supply and the return of the Pfizer distribution volume.
• Expected savings from completing the development of the new automated Marsden
Park Distribution Centre by the end of FY22 which will allow consolidation of API’s
supply chain footprint.
• Anticipated medium to longer term earnings uplift resulting from the exit of Consumer
Brands manufacturing in New Zealand by the second half of FY23.
The Board notes that the Indicative Proposal implies a premium of 18.7%1 to the 3-month
Volume Weighted Average Price (VWAP) which is significantly below the Australian market
average for transactions of this nature.
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.
API shareholders are not required to do anything in relation to the Indicative Proposal and
the API Board will keep shareholders updated as appropriate.

courtesy of Bell Direct
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DYOR
i hold both API and WES

time will tell but , i am pleased they rejected the offer ,

REVISED NON-BINDING INDICATIVE PROPOSAL FROM WESFARMERS

On 12 July 2021, Australian Pharmaceutical Industries (ASX:API)(“API”) announced it had
received a non-binding indicative proposal from Wesfarmers Limited (ASX:WES)
(“Wesfarmers”) to acquire 100% of the shares in API for cash consideration of $1.38 per
share. This proposal was rejected by the API Board on 29 July 2021.
Today, API announces that it has received a revised non-binding indicative proposal
(“Revised Indicative Proposal”) from Wesfarmers to acquire 100% of the shares in API, by
way of a scheme of arrangement, for cash consideration of $1.55 per share. The Revised
Indicative Proposal provides for the payment of fully franked dividends of up to a maximum
of 5 cents per share, including any final dividend for the financial year ended 31 August
2021. The cash component of any such dividends will reduce the cash consideration
accordingly.
Details of Wesfarmers Revised Indicative Proposal
The Revised Indicative Proposal of $1.55 per share represents a premium to API’s
undisturbed share price (as at 9 July 2021) of:
• 35.4% to the closing price of $1.145 per share on 9 July 2021; and
• 36.8% to the one-month volume weighted average price to 9 July 2021 (“VWAP”) of
$1.133 per share.
Wesfarmers Revised Indicative Proposal is subject to a number of conditions including:
• Satisfactory completion of confirmatory due diligence by Wesfarmers;
• Clearance from the Australian Competition and Consumer Commission;
• Receipt by Wesfarmers of required regulatory approvals;
• Unanimous recommendation of the API Board and a commitment from all API
Directors to vote in favour of the transaction; and
• Execution of a Scheme of Implementation Deed (“SID”).
2 | P a g e
Support for the Revised Indicative Proposal
Following careful consideration and consultation with its advisers, the API Board (the
“Board”) has determined that it is in the interests of API’s shareholders to progress the
Revised Indicative Proposal and allow Wesfarmers to undertake confirmatory due
diligence.
The Board unanimously intends to recommend the Revised Indicative Proposal to
shareholders (at the offer price of $1.55 per share), subject to:
• The parties entering into a binding SID on terms no less favourable to API’s
shareholders than the Revised Indicative Proposal following completion of
Wesfarmers’ confirmatory due diligence;
• No superior proposal being received; and
• An independent expert concluding (and continuing to conclude) that the Revised
Indicative Proposal is in the best interests of API shareholders.
“This revised offer better reflects the strength and potential of our stable of businesses that
have been built by the efforts and passion of all of our people within API. Aligned with our
vision of “enriching life”, we remain firmly focused on making a difference for all our
customers and trading partners,” API’s CEO and Managing Director, Mr Richard Vincent
said.
Next steps
API and Wesfarmers have entered into a Process Deed under which Wesfarmers has been
granted until 16 October 2021 to undertake exclusive confirmatory due diligence to
facilitate a binding offer. A copy of the Process Deed is attached to this announcement.
At this stage API shareholders do not need to take any action in relation to the Revised
Indicative Proposal from Wesfarmers.
The Board notes that there is no certainty that the engagement between API and
Wesfarmers will result in a change of control transaction or an offer capable of
acceptance by API shareholders.
API will continue to keep the market informed in accordance with its continuous disclosure
obligations.
This announcement is authorised for release by the Board of Directors of API.

courtesy of Bell Direct
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DYOR
i hold both API and WES

i still would have rather i kept API but i suppose this will be a done deal now ( and would have preferred a scrip component since i already hold some WES )

Proposed merger with API

Sigma Healthcare Limited (Sigma) today announces that is has submitted a conditional non-binding
indicative proposal to acquire 100% of the shares in Australian Pharmaceutical Industries Limited (API), by
way of an API scheme of arrangement (Proposal).
Sigma believes that the rationale for a combination of API and Sigma is highly compelling, with significant
benefits accruing to both sets of shareholders, the industry and other stakeholders. Sigma believes a merged
Sigma and API would result in:
• Revenue stream, product and customer diversification;
• Significant synergies and other efficiencies available for the benefit of both API and Sigma
shareholders and other stakeholders;
• Stronger platform to operate in a changing industry landscape;
• The combined entity (MergeCo) will benefit from Sigma’s best-in-class and modern distribution
capability; and
• Greater scale and balance sheet capacity.
Under the Proposal, API shareholders would receive consideration of 2.05 Sigma shares plus $0.35 cash for
each API share held. API shareholders will also have the flexibility of a mix and match option under the
Proposal where they are able to elect a maximum cash or a maximum shares consideration1
.
Based on the most recent closing price of Sigma shares ($0.595 per share on 24 September 2021), the
Proposal implies a value of $1.57 per API share before synergies. API shareholders would own 48.8% of
MergeCo under the Proposal.
Through work conducted during previous engagement, Sigma has identified at least c.$45m per annum of
potential cost synergies to be available from the combination of the companies, representing a potentially
significant value creation opportunity for both Sigma and API shareholders.
The Proposal allows for the payment of fully franked dividends by API of up to a maximum of $0.05 per share,
including any final dividend for the financial year ended 31 August 2021. The cash component of the
consideration will be reduced by the amount of any such dividend.
Sigma intends to fund the cash component of the Proposal through new debt. Sigma expects the MergeCo
balance sheet will be levered at less than 2.5x net debt / EBITDA upon implementation of the Proposal.
The Proposal is subject to a number of conditions including completion of satisfactory confirmatory due
diligence by Sigma, receipt of necessary regulatory approvals and unanimous recommendation of the API
1 Subject to scale back noting maximum cash and maximum Sigma shares available.
ME_190996941_1
Board and a commitment from all API Directors to vote any API shares they respectively hold or control in
favour of the transaction.
The API Board has considered the Proposal and determined that it is superior to the non-binding indicative
proposal from Wesfarmers announced on 16 September 2021. As a result, API has decided to grant Sigma
access to allow Sigma to undertake confirmatory due diligence and commence working with Sigma on
negotiating and signing binding transaction documentation, including a Merger Implementation Deed.
At this time, Sigma shareholders do not need to take any action in relation to the Proposal. We will update
shareholders and the market in due course noting our ASX continuous disclosure obligations.
Sigma has appointed Goldman Sachs as financial advisor and MinterEllison as legal advisor.
For more information, please contact:
Contact:
Gary Woodford
Corporate Affairs Manager Steve Dabkowski
Sigma Healthcare Limited BlueDot Media
gary.woodford@sigmahealthcare.com.au steve@bluedot.net.au
0417 399 204 | 03 9215 9632 0419 880 486

courtesy of Bell Direct
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DYOR

i hold both SIG and API ( and WES )

the scrip offer would suit me better , but SIG and API are held on different platforms messy but so far the SIG would be better for me ( i have much more API than SIG )

Acquisition of 19.3 per cent stake in API
Wesfarmers (ASX:WES) today announced that it has acquired 95.1 million shares in Australian
Pharmaceutical Industries Limited (“API”, ASX:API), representing 19.3 per cent of API’s shares
outstanding. The acquisition was made pursuant to the Undertaking Agreement entered into on 9 July 2021
with Washington H. Soul Pattinson and Company Limited (“WHSP”, ASX:SOL).
Wesfarmers remains committed to pursuing its proposal to acquire 100 per cent of the shares in API by
way of a scheme of arrangement for cash consideration of $1.55 per share, subject to the terms and
conditions outlined in the Wesfarmers announcement of 16 September 2021. Wesfarmers is progressing
with its confirmatory due diligence investigations in support of its proposal.
Wesfarmers notes the announcement on 27 September 2021 of a proposal by Sigma Healthcare Limited
(“Sigma”) to acquire API. Wesfarmers is of the view that the Wesfarmers proposal is superior to the Sigma
proposal and is in the best interests of API shareholders. Given Wesfarmers’ commitment to progress its
own proposal to acquire API, Wesfarmers does not intend to support, or vote its 19.3 per cent API
shareholding in favour of, the Sigma proposal.
Wesfarmers Managing Director Rob Scott said that the Wesfarmers proposal would deliver an attractive
premium and certain cash return to API shareholders.
“Wesfarmers continues to see opportunities to invest in and strengthen the competitive position of API and
its community pharmacy partners. Exercising our option to acquire 19.3 per cent of API reflects the Group’s
commitment to the transaction and the continued progress of the Wesfarmers proposal,” Mr Scott said.
Wesfarmers exercised its option to acquire the shares from WHSP under the terms of the Undertaking
Agreement following the announcement of Sigma’s proposal, which the API Board has not recommended.
The acquisition price was $1.38 for each API share acquired. In addition, Wesfarmers is required to make
further payments to WHSP such that WHSP receives total consideration per API share equivalent to that
paid under any successful Wesfarmers acquisition of API.

courtesy of Bell Direct
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DYOR

i hold both SIG and API ( and WES )

the scrip ( SIG ) offer would suit me better