In a sudden shift of direction, Woolworths Group has dropped its $872 million proposal to pick up Australian Pharmaceutical Industries, leaving the business likely to be acquired by Wesfarmers.
In a statement to the market, Woolworths said it was unable to validate the financial returns it would require from the acquisition after completing its due diligence process, and that it was therefore revoking its non-binding offer.
“We are grateful to the board and leadership team of API for their constructive engagement and support through [this] process,” Woolworths Group chief executive Brad Banducci said.
After the announcement, API said that the proposal by Wesfarmers to acquire the remainder of its business was still going ahead, and would see shares paid at a rate of $1.55 per share.
According to Wesfarmers, its aim for the buy-up is to enable the conglomerate to enter the growing health, wellbeing and beauty sector.
More to come.