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?

| More on:
A man in a business suit whose face isn't shown hands over two australian hundred dollar notes from a pile of notes in his other hand to an outstretched hand of another person.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

More on Mergers & Acquisitions

Projection of two hands being shaken on a deal.
Materials Shares

Sayona Mining shares sink 13% on Piedmont Lithium merger news and capital raise

This merger will create the largest lithium producer in North America.

Read more »

Miner looking at a tablet.
Materials Shares

Down 28% in 2024, why this ASX 200 lithium stock could now be 'deeply undervalued'

The ASX 200 lithium stock has drawn plenty of investor attention over the past month.

Read more »

Woman looking at her tablet at a warehouse.
Mergers & Acquisitions

ASX 200 stock slides on huge $13 billion buyout news

ASX 200 investors are mulling over the $13 billion merger implications on Wednesday.

Read more »

Rocket powering up and symbolising a rising share price.
Mergers & Acquisitions

Guess which ASX microcap stock just rocketed 67% on takeover news

Investors are sending the ASX microcap stock flying amid a takeover bid.

Read more »

A group of business people pump the air and cheer.
Mergers & Acquisitions

This ASX small-cap stock is exploding 75% on takeover news!

The takeover premium is large.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock just rocketed 40% on takeover news

A colossal company finds value in the small end of our ASX town.

Read more »

Data Centre Technology
Mergers & Acquisitions

ASX 200 stock nabs $400 million data centre amid AI rush

Another way to invest in the enablers of artificial intelligence is being built.

Read more »

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »