The Woolworths Group Ltd (ASX: WOW) share price is up 0.5% in early trading. The CEO of Woolworths is trying to convince Australian Pharmaceutical Industries Ltd (ASX: API) pharmacists to back the proposed takeover.
Woolworths CEO turns on the charm
Woolworths CEO Brad Banducci has written a letter to the pharmacists of API, which was published in the Pharmacy Daily.
It is down to the API board and shareholders that will decide which offer to accept – the one from Woolworths or from Wesfarmers Ltd (ASX: WES). However, both Woolworths and Wesfarmers want to win over the approval of pharmacists because they are key stakeholders.
In that letter, Mr Banducci aimed to "allay misplaced fears" about the company's intentions.
He said in the letter published on Pharmacy Daily that he understood that pharmacists had concerns about the bid considering the history of "perceived rivalry" between pharmacies and supermarkets. Mr Banducci said that the company will not look to change pharmacy location and ownership rules under his leadership.
Mr Banducci also wrote:
We are not here to disrupt the sector. We are here to help strengthen it. We strongly believe that a strong local community pharmacy health model is key to the health and wellbeing of our local communities and nation overall.
Through our proposal to acquire API, we are committed to helping those in the sector successfully operate their independently owned businesses.
Our investment revolves around bringing a set of capabilities we believe can help strengthen the existing vital role you play in the community for the benefit of both patients and customers.
Pharmacy Daily noted that the Woolworths CEO did not directly address concerns about how it would manage data from the Priceline Sister Club loyalty scheme, though Mr Banducci said the company would use its "extensive experience in areas such as digital, loyalty, payments, analytics and importantly, privacy."
The battle continues
According to reporting by The Australian, the Wesfarmers boss Rob Scott recently wrote to Trent Twomey, the president of the Pharmacy Guild, saying how it was committed to the community pharmacy model. Wesfarmers thinks it can deliver even better products and services to community pharmacists and Priceline franchisees that will help them be more competitive and create value over time.
Both Wesfarmers and Woolworths have lobbed bids for API. Woolworths' non-binding proposal is a cash offer of $1.75 per API share, which is $0.20 per share (or 12.9%) higher than the price that was agreed between API and Wesfarmers.
Both of them have outlined they will utilise their powerful logistics and other scale benefits to help API improve.
Woolworths share price snapshot
Over the last month, Woolworths shares have dropped around 5%.
