Investors owning Wesfarmers Ltd (ASX: WES) shares may want to know about the progress that the company is making towards acquiring the Australian Pharmaceutical Industries Ltd (ASX: API) business.
API shareholders are headed towards a meeting later this week to vote on the offer by Wesfarmers to buy the whole business. This meeting will be held virtually because of COVID-19.
In the absence of a superior proposal and subject to the independent expert continuing to conclude that the scheme is in the best interests of API shareholders, each API director recommends that API shareholders vote in favour of the scheme and intends to vote in favour of the takeover.
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What's the latest on the votes on the Wesfarmers bid for API?
According to reporting by the Australian Financial Review, close to a third of API's register had voted at the start of this week, with most shareholders being in favour of the deal. However, a few institutional investors have suggested that the takeover offer could have been higher.
Reaching the 30% of shares voted milestone implies that API and Wesfarmers are around halfway through the 60.5% needed for the deal's approval due to the fact that Wesfarmers owns 19.3% of API.
There is still a bit of uncertainty about the overall total because other shareholders include fund managers which may decide "at the last minute" and there are also pharmacists within the voting blocks.
Last month, the Federal Court of Australia approved a meeting of API shareholders to consider and vote on the scheme. In February 2022, it was also announced that the ACCC would not oppose the API acquisition because of the ongoing competition from players like Chemist Warehouse, Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW)
How much is the bid?
The initial takeover offer from Wesfarmers was an offer of $1.38 per share. However, that was then raised to $1.55 per share in September 2021.
Wesfarmers and API have entered into a scheme implementation deed that allows for the payment of fully franked dividends up to a maximum of $0.05 per API share, which included the 2 cents per share final dividend declared by API for FY21. The cash consideration of $1.55 would be reduced by the cash component of any such dividends.
The record date for the proposed special dividend date is 25 March 2022.
Why is Wesfarmers buying API?
For Wesfarmers, this acquisition will provide an "attractive opportunity to enter the growing health, wellbeing and beauty sector."
The giant ASX retail share sees opportunities to invest in and strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers.
