WES +0.12%: has lobbed a bid for distributor of pharmaceutical and personal care goods Australian Pharmaceutical Industries (API) at $1.38/share, valuing API at $687m, around a 20% premium to last close, although API also downgraded guidance today. API has contracts in place with Priceline and Soul Pattinson branded pharmacists while Listed Investment Company (LIC) Washington H Soul Patts (SOL) has a ~20% stake in API, and has already given Wesfarmers its blessing in the bid. It’s an interesting move for Wesfarmers, On one hand, they have plenty of dry powder and have been on the lookout for takeover targets however on the other hand it does increase its focus on retail. Wesfarmers currently owns Bunnings, Officeworks and Kmart – a distribution network that API can surely benefit from. API’s earnings are at or near a low with lockdowns impacting their earnings. Another example of attractive assets being snapped up as earnings take a short term hit.
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