Today is the last hurrah for API. What does this mean for Wesfarmers (ASX:WES) shares?

It’s the last day of trading for API shares. What does this mean for Wesfarmers?

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Key points

  • Today is the last day of trading for API shares 
  • Wesfarmers will soon own the pharmacy and distribution business 
  • API will form a new health, wellbeing and beauty division of Wesfarmers 

Today is the last trading day for Australian Pharmaceutical Industries Ltd (ASX: API) shares. What does this mean for Wesfarmers Ltd (ASX: WES) shares?

Wesfarmers is nearing the completion of the takeover of pharmacy business API.

Earlier today, it was confirmed that the takeover is now legally effective.

API said that it had lodged a copy of the orders made by the Federal Court of Australia with the Australian Securities and Investments Commission (ASIC). Yesterday, the Federal Court approved the takeover between API and its shareholders.

Wesfarmers is going to buy the rest of API’s shares that it doesn’t already own.

Last day of trading for API shares

With the scheme now being legally effective, API announced that it expects API shares on the ASX to be suspended from the close of trading today.

API shareholders will be paid the takeover money with the implementation of the takeover, which is expected to be on Thursday 31 March 2022.

How much was the takeover offer from Wesfarmers?

Wesfarmers’ final bid accepted by API was for $1.55 per share. That was an increase from the initial offer of $1.38 per share last year.

The takeover agreement allowed for the payment of fully franked dividends up to a maximum of $0.05 per API share, including the final dividend of 2 cents per share declared by API for FY21. The cash component of any dividends would reduce the cash consideration of $1.55.

Last week, API announced a fully franked special dividend of $0.03 per share, which had an ex-dividend date of 24 March 2022 and a payment date of 29 March 2022.

What is Wesfarmers going to do with the API business?

Wesfarmers says that it 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.

The ASX retail share said that its investments in API are expected to strengthen the competitive position of API and its community pharmacy partners.

The managing director of Wesfarmers, Rob Scott, said that the acquisition of API would provide an attractive opportunity to enter the growing health, wellbeing and beauty sector. In July 2021, Mr Scott said:

API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector.

The combination of Wesfarmers and API is a compelling opportunity to capitalise on API’s strengths and positioning in these markets while drawing upon Wesfarmers’ capabilities in retail and distribution, our strong balance sheet and our willingness to invest in our businesses for growth over the long-term.

Wesfarmers share price snapshot 

The Wesfarmers share price is up 0.6% today. However, it is down 15% since the start of 2022.

Motley Fool contributor Tristan Harrison 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 and has recommended 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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