The Wesfarmers Ltd (ASX: WES) share price has hit a new all-time high this morning. This comes after The Australian reported the conglomerate was seeking due diligence information from Australian Pharmaceutical Industries Ltd (ASX: API) to potentially make a new takeover bid.
At the time of writing, shares in the retail and industry giant are trading for $63.15 – up 0.95%. Earlier they hit the record price of $63.25. The S&P/ASX 200 Index (ASX: XJO), meanwhile is 0.11% higher.
API rejected Wesfarmers previous offer last week for $1.38 per share, saying it “undervalues API, is not compelling and is not in the best interests of API shareholders”.
Let’s take a closer look at today’s news.
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According to The Australian’s report, Wesfarmers management has reached out to API “for some confidential information about the company so it can lift its offer for the business”.
Apparently, Wesfarmers would only be willing to increase its offer with additional price-sensitive information that is not available to the market.
When API rejected the Perth-based business’ offer last Thursday, the Wesfarmers share price fell.
At the time, API said the offer of an 18.7% premium to its 3-month volume weighted average price was “significantly below the Australian market average for transactions of this nature”. The board also said Wesfarmers bid was “opportunistic” as COVID has had a detrimental impact on the company’s operations.
It also felt its portfolio of complementary wholesale and retail businesses was strategically well-positioned in the growing health, wellness, and beauty sector.
In addition, API noted the potential of its investment in 39 new ‘Clear Skincare’ clinics over the past 3 years.
The Australian reports that API shareholders are optimistic Wesfarmers will negotiate a higher suitable offer for the takeover.
Wesfarmers share price snapshot
Over the past 12 months, the Wesfarmers share price has increased 35.7%. It has outperformed the ASX 200 by 10 percentage points during that time period.
Year-to-date, Wesfarmers shares have appreciated 22.2%. The company will release its full-year results on 27 August.
Wesfarmers has a market capitalisation of around $70.9 billion.