Wesfarmers (ASX:WES) share price lifts in latest push for API

The retail conglomerate is a fifth of the way to securing its target…

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The Wesfarmers Ltd (ASX: WES) share price is rising this Thursday. The positive price movement comes as the retail conglomerate confirms it has acquired nearly a fifth of takeover target Australian Pharmaceutical Industries Ltd (ASX: API).

At the time of writing, shares in the company are trading for $54.51 – up 0.82%. For context, the S&P/ASX 200 Index (ASX: XJO) is 0.75% higher.

Let’s take a closer look at today’s news.

Wesfarmers up the stakes with its stake in API

In a statement to the ASX, Wesfarmers confirmed its acquisition of 95.1 million shares in API – or roughly 19.3% of the company. The purchase was made pursuant to an agreement with API’s largest shareholder, Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Wesfarmers says this is not the end of its interest in API. The retail conglomerate says it still wishes to purchase 100% of API for $1.55 per share.

Wesfarmers also says now it owns nearly a fifth of API, it will use its voting power to try and stop Sigma Healthcare Ltd (ASX: SIG) buying the retail pharmacist. Sigma submitted a mostly scrip bid for API, ratcheting up the bidding war for the retail pharmacist. The Wesfarmers share price, however, was not too affected by this news.

The company paid Soul Patts $1.38 per share and has agreed to pay the remainder should its bid for API be successful.

Wesfarmers managing director Rob Scott said:

Wesfarmers continues to see opportunities to invest in and strengthen the competitive position of API and its community pharmacy partners. Exercising our option to acquire 19.3 per cent of API reflects the group’s commitment to the transaction and the continued progress of the Wesfarmers proposal.

What else has affected the Wesfarmers share price recently?

Another story that might have affected the Wesfarmers share price in recent days was the news the Australian Competition and Consumer Commission (ACCC) would not stand in the way of its subsidiary, Bunnings, acquiring privately held Beaumont Tiles.

The Wesfarmers share price ended that day higher.

The watchdog said Bunnings doesn’t currently have a large presence in tile sales in Australia. However, it did warn it will pay particularly close attention to any further acquisitions the home improvement and lifestyle retailer might make.

ACCC chair Rod Simms said of the takeover and his organisation’s decision:

Specialist tile retailers have a far more extensive range [than Bunnings], displayed in dedicated tile showrooms with specialist staff who can provide design and product advice to customers and referrals to tilers…

Stronger competition may pose challenges for some tile retailers, but it is unlikely to lead to a substantial lessening of competition in this market.

Wesfarmers share price snapshot

Over the past 12 months, the Wesfarmers share price has increased by more than 18%. Year-to-date, shares in the company are up 6%. It should be noted both these figures are poorer than the performance of the ASX 200 Index.

Wesfarmers has a market capitalisation of approximately $61.2 billion.

Should you invest $1,000 in Wesfarmers right now?

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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