API (ASX:API) share price rockets 16% higher after Woolworths launches takeover approach

A bidding war is taking place for API…
The post API (ASX:API) share price rockets 16% higher after Woolworths launches takeover approach appeared first on The Motley Fool Australia. –

The market may be trading lower today but that hasn’t stopped the Australian Pharmaceutical Industries Ltd (ASX: API) share price from rocketing higher.

In morning trade, the pharmacy chain operator and distributor’s shares are up 16% to $1.74.

Why is the API share price rocketing higher?

Investors have been driving the API share price higher after a bidding war for the Priceline owner broke out between two of Australia’s biggest retailers.

This morning Woolworths Group Ltd (ASX: WOW) announced that it has submitted a non-binding transaction proposal to acquire API by way of a scheme of arrangement.

According to the release, Woolworths has offered $1.75 cash per share, valuing API’s equity at $872 million. But more importantly, this offer represents a significant 20 cents per share or 12.9% increase over the offer tabled by Wesfarmers Ltd (ASX: WES) last month.

The release also notes that the offer is a 52.8% premium to the undisturbed API share price on 9 July.

Why does Woolworths want to acquire API?

Woolworths’ CEO, Brad Banducci, believes there is a compelling strategic rationale to acquire API.

He notes that: “Health and wellness is a large, fast-growing category and API would be a fantastic addition to our food and everyday needs ecosystem.”

“The combination of the two businesses is expected to lead to material shared benefits and synergies, much of which will be reinvested back into strengthening and growing API and its pharmacy partners,” Mr Banducci added.

What’s next?

According to a separate release from API, the company’s Board believe the Woolworths proposal is more favourable to API shareholders than the Wesfarmers scheme. It also feels it is reasonably likely to be a superior proposal, as defined in the Wesfarmers scheme implementation deed.

As a result, the API Board has decided to allow Woolworths to undertake confirmatory due diligence to facilitate a binding offer.

However, the company has warned that there is no certainty that a deal will ultimately be agreed. As such, shareholders do not need to take any action at this stage.

API also highlights that the Wesfarmers scheme includes a matching right in favour of Wesfarmers, which is exercisable before API enters into any binding agreement in respect of a competing proposal. All eyes will be on Wesfarmers in the coming days.

The API share price is up 38% in 2021 following today’s gain.

The post API (ASX:API) share price rockets 16% higher after Woolworths launches takeover approach appeared first on The Motley Fool Australia.

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

Before you consider API, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and API wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Why the Wesfarmers (ASX:WES) share price lost momentum in November

Woolworths (ASX:WOW) share price falls after outbidding Wesfarmers for API

Why did the Woolworths (ASX:WOW) share price tumble today?

Here’s why ASX retail shares are in the spotlight on Tuesday

How does the Wesfarmers (ASX:WES) share price typically perform in the lead up to Christmas?

Motley Fool contributor James Mickleboro 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 Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!