Stock Update

Australian Pharmaceutical Industries (API:ASX)

12 Jul 2021
Australian Pharmaceutical Industries Limited is a pharmaceutical support company which provides wholesale distribution of pharmaceutical and related products to pharmacies, hospitals and doctors. The Company also provides various retail support services and financial services to pharmacies along with distributing dental and related products to dental practices.

API, the owner of the Priceline franchise network, is the latest ASX-listed company in the takeover spotlight as it announced that Wesfarmers (WES) had made an indicative takeover offer at $1.38 which is a mediocre 21% premium to the closing price on Friday. Additionally, WES has the support of major shareholder Washington Soul Pattinson (SOL) which has agreed to sell its 19.3% stake in the absence of further bids.

While this is the first chapter of this story, the fact that WES has engaged SOL so early makes it clear WES is keen on its target. It is a logical target for WES given its retail know-how and API’s weak performance and is opportunistic considering the impact lockdowns have had on API (with the offer below its price in April). We are going to stay on the sidelines for now despite our view that there will be higher offers, and the hope is that the API board engages quickly so that we can have some confidence in our downside before investing.



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