MELBOURNE: Australia’s pharmacy industry could be next in line for a bout of M&A fever that infected betting, mortgage and agriculture companies this year. On Thursday Australian Pharmaceutical Industries (API.AX)rejected an informal A$687 million ($505 million) offer read more from conglomerate Wesfarmers (WES.AX). The target’s stock, already just above the 21% premium on the table, nudged higher.
There’s a good chance a third party, Sigma Healthcare (SIG.AX), enters the race. It and API tried to merge in 2018. At the time, they reckoned they could cut A$60 million in annual costs. Taxed and capitalised, that’s A$420 million, enough to cover a premium of some 70% to API’s undisturbed share price, Breakingviews calculates.
The $51 billion Wesfarmers would probably have the upper hand, both due to its size and to securing the support of the 20% stake held by API’s largest shareholder. A Macquarie (MQG.AX) fund had similar support in its pursuit read more of Vitalharvest Freehold Trust – but was successful only after a 19-round bidding war. That’s a shot in the arm only API would want.
