The Australian Pharmaceutical Industries Ltd (ASX: API) share price is in the red after it rejected Wesfarmers Ltd's (ASX: WES) takeover offer.
API announced this morning its board has rejected the offer, saying it's not compelling or in its shareholders' best interests.
Right now, the API share price is $1.40, 0.35% lower than its previous closing price.
Let's take a closer look at the news out of API this morning.
Wesfarmers' offer rejected
The API share price is down today after the company rejected Wesfarmers' takeover offer of $1.38 cash per share.
The pharmaceutical, health, and beauty-focused company said Wesfarmers' offer was at an 18.7% premium to API's 3-month volume weighted average share price. It said that figure is "significantly below the Australian market average for transactions of this nature".
Additionally, API's board said the offer was opportunistic given the impact COVID-19 has had on API's profits.
It also said it failed to take into account the strategic value of Priceline.
According to API, its expecting "substantial" growth in Priceline's earnings as COVID-19 restrictions lessen and the impact of closing 9 loss-making stores take effect.
It also said Wesfarmers' offer failed to take into account API's investment into 39 Clear Skincare clinics and the savings expected from the development of the Marsden Park Distribution Centre.
Finally, it said it expects its pharmaceutical distribution business to get more funding from the 4 years remaining on API's 7th Community Pharmacy Agreement, as well as its arrangement with Pfizer (which doesn't include the COVID-19 vaccine).
The Wesfarmers share price is falling alongside that of API this morning.
Currently, shares in Wesfarmers are going for $61.25, 0.49% lower than their previous close.
API share price snapshot
API has been performing well on the ASX lately.
Right now, shares in API are trading for 11.9% more than they were at the start of the year. They've also gained 29% since this time last year.
The company has a market capitalisation of around $694 million, with approximately 492 million shares outstanding.
