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Woolworths' bid for API trumps Wesfarmers

Steven DeareAAP
Woolworths has offered to buy Australian Pharmaceutical Industries.
Camera IconWoolworths has offered to buy Australian Pharmaceutical Industries. Credit: AAP

Woolworths has pitched an $872 million takeover offer for Australian Pharmaceutical Industries, pitting the retail giant against Wesfarmers.

API on Thursday said Woolworths' offer of $1.75 for each of its shares was superior to Wesfarmers' bid from September of $1.55 per share.

Woolworths boss Brad Banducci said health was a large, fast-growing category and API would be a fantastic addition to the food and everyday needs range.

The API network includes the Pharmacist Advice, Priceline Pharmacy and Soul Pattinson Chemist outlets.

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Wesfarmers, which owns Bunnings and Officeworks, wanted the company to form the basis of a healthcare division.

The Australian Competition and Consumer Commission will likely examine Woolworths' proposal closely as API is a supplier to community pharmacies in some regions.

Laws govern who can own pharmacies and where they can trade. This helps ensure medicines remain affordable.

Woolworths said it would support the community pharmacy model.

"We are not seeking to change - now or in the future - the pharmacy ownership rules requirements or location rules," the company said.

The Pharmacy Guild of Australia said members wanted to know how the community pharmacy model would be protected if Woolworths was successful.

API will allow the grocery giant to examine its financial accounts in order to make a binding offer.

API had entered into a merger with Wesfarmers last month after Wesfarmers took a 19.3 per cent stake.

Sigma Healthcare had bid for API but withdrew after Wesfarmers' better offer.

API shares on the ASX were up a little more than 16 per cent to $1.73 at 1534 AEDT.

Woolworths shares were up by 0.38 per cent to $39.99.

Wesfarmers shares were higher by 1.68 per cent to $58.00.

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