The Australian Pharmaceutical Industries Ltd (ASX: API) share price has come under pressure on Friday.
This follows news that Woolworths Group Ltd (ASX: WOW) has pulled out of the race to acquire the pharmacy chain operator.
At the time of writing, the API share price is down by a sizeable 12% to $1.52.
What's happening?
This morning Woolworths announced that it has withdrawn its $1.75 per share takeover offer following a period of due diligence. The retail giant advised that its due diligence revealed that the financial returns from the transaction were not sufficient.
The release explained: "Following the completion of a comprehensive due diligence process, Woolworths Group has advised API that it has withdrawn its proposal as it has not been able to validate the financial returns it requires in line with the Group's capital allocation framework."
Woolworths CEO, Brad Banducci, commented: "We are grateful to the Board and leadership team of API for their constructive engagement and support throughout the due diligence process."
What now?
This news now puts rival Wesfarmers Ltd (ASX: WES) in pole position to acquire the Priceline operator.
However, much to the disappointment of API shareholders, the Kmart operator's offer was considerably lower than Woolworth's offer.
Wesfarmers has signed an agreement to acquire API for $1.55 per share, which was 10% lower than where the API share price was trading on Thursday. Though, this will be reduced to $1.53 to reflect a recently paid 2 cents per share dividend.
In response to today's news, API stated that the agreement with Wesfarmers "remains in place and is on track for completion in the first quarter of calendar year 2022."
In the meantime, the company will continue to keep the market informed in accordance with its continuous disclosure obligations.
