Woolworths Group (ASX:WOW) - CEO, Brad Banducci
CEO, Brad Banducci
Source: Woolworths
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  • Woolworths (WOW) has withdrawn from its non-binding proposal to Australian Pharmaceuticals (API) after a month-long due diligence period
  • WOW previously announced its intentions on December 2, stating it would offer API the cash price of $1.75 per share
  • Woolworths’ announcement cited the reason for the withdrawal as unable to “validate the financial returns it requires in line with the Group’s capital allocation framework”
  • According to the WOW statement dated December 20 2021, it had offered a 12.9 per cent premium price above the offer of Wesfarmers (WES)
  • Woolworths shares have fallen 0.08 per cent to $37.40 a share, WES traded up by 1.05 per cent at $58.69 apiece while API fell 12.4 per cent to $1.52 a share

Woolworths (WOW) has withdrawn from its non-binding proposal to acquire Australian Pharmaceuticals (API) after a month-long due diligence period has come to an end.

Woolworths previously announced its intentions on December 2, stating it would offer API the cash price of $1.75 per share, where the total equity value was determined at a total equity value of $872 million.

“We are grateful to the Board and leadership team of API for their constructive engagement and support throughout the due diligence process,” CEO Brad Banducci said.

Woolworths’ announcement cited the reason for the withdrawal as unable to “validate the financial returns it requires in line with the Group’s capital allocation framework”.

According to the WOW statement dated December 20 2021, it had offered a 12.9 per cent premium price above the offer of Wesfarmers (WES).

Wesfarmers in the running

API also has vested interest from Wesfarmers which began its acquisition journey in July 2021. After the terms of the first non-binding agreement were rejected by API, WES came back with another offer by September.

WES and API hold a Scheme Implementation Deed (SID) by which the cost and terms of the acquisition have been ironed out.

As part of the SID, WES has agreed to a cash value of $1.55 per API share, where the cash component of dividend paid of up to five cents per API share.

This includes the two cents fully franked final dividend for the year ending August 31, 2021, that was paid in December 2021.

In addition, a fully owned WES subsidiary would purchase all API shares that WES did not already own.

API said in a statement today that the SID remains “in place and is on track for completion in the first quarter of calendar year 2022”.

Woolworths shares have fallen 0.08 per cent to $37.40 a share, WES traded up by 1.05 per cent at $58.69 apiece while API fell 12.4 per cent to $1.52 a share at 1:47 pm AEDT.

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