Wesfarmers, the retail mammoth behind some of Australia’s biggest stores such as Bunnings, Kmart and Officeworks are looking to venture into a new business segment that no grocery business owner has entered, pharmaceutical wholesaling.

Wesfarmers announced to the stock market that they have made an unsolicited bid to acquire all of Australian Pharmaceutical Industries (better known as API) for $1.38 per share. The values the wholesaler at $68 million dollars. With this news released to the market, API shares rose to nearly the offer price, jumping 18.78 percent to $1.36. Wesfarmers shares were relatively flat during the days trade.

A major shareholder, Washington Pattinson, has already backed the bid and encouraged shareholders to follow.

Wesfarmers believe that Australian Pharmaceutical Industries is a good acquisition as it allows the retailer to have more of a stake in the health and beauty sector. Wesfarmers can leverage it’s strength in logistics, marketing and retail to grow API’s market position.

Grocery companies have traditionally been opposed the pharmacy ownership laws which restrict ownership of pharmacies to pharmacists. Wesfarmers however, has said that they support the ownership model as it is one of the strengths of API.

In an official statement, API said that they were assessing the bid and said that due to COVID restrictions, there has been a notable drop in performance with the share price reflecting that drop. They believe that the takeover bid is an opportunistic one which is trying to capitalise on a lower than usual share price. Shareholders will vote on the takeover bid at some stage.

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