IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

API in Role Reversal as Its Receives a Bid from Sigma

Woolworths' API Bid Likely to Kick off a Bidding War with Wesfarmers

API/Sigma Merger: Sigma Shareholders Need a Better Offer

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Australian Pharmaceutical Industries / Event-Driven

Australian Pharmaceutical Industries (API AU)

<a href="https://www.smartkarma.com/entities/australian-pharmaceutical-industries-limited" target="_blank" data-smartkarma-citation="entities:19399:1" rel="noopener">Australian Pharmaceutical Industries (API AU)</a> is a vertically integrated wholesaler, franchise owner and retailer. API has received a revised non-binding indicative offer of A$1.55 per share from <a href="https://www.smartkarma.com/entities/wesfarmers-ltd" target="_blank" data-smartkarma-citation="entities:1104:1" rel="noopener">Wesfarmers Ltd (WES AU)</a>. The revised indicative offer of A$1.55 per share is a 35.4% premium to the unaffected price of A$1.145 (9 July).The proposal also allows the payment of fully franked dividends of up to 5 cents per share, including any final dividend, declared for the financial year ended 31 August. The cash consideration of the offer will be reduced by the cash component of any dividends. The revised indicative offer is also a 12.3% bump to the original offer of A$1.38 per share received from Wesfarmers on 12 July, which was rejected by the Board on 29 July. As announced in the first offer, Washington H. Soul Pattinson (WHSP), the largest shareholder who represents 19.3% of the outstanding shares, will vote in favour of Wesfarmers’ revised offer. WHSP has also granted a call option on its API shares in favour of Wesfarmers.  The Board intends to unanimously recommend the revised offer subject to the entry into a binding scheme implementation deed following the completion of confirmatory due diligence that will conclude by 16 October. The revised offer is conditional on receiving regulatory approvals and clearance from the Australian Competition and Consumer Commission (ACCC). We think that the ACCC will not have issues with the transaction. <div class="content-highlight">Wesfarmers aims to make API the foundation of its new Healthcare division, which will be used as the springboard to grow its presence in the health, wealth and beauty sectors. For API shareholders, we think that indicative revised offer is attractive compared to historical P/E multiples. The offer will prove attractive to shareholders who are looking for valuation certainty in an environment where API’s earnings continue to be impacted by COVID-19 related restrictions. At the last close price of A$1.48, the shares are trading at a 4.7% gross spread to the indicative revised offer.</div>

Australian Pharmaceutical Industries (API AU) is a vertically integrated wholesaler, franchise owner and retailer. API has received a revised non-binding indicative offer of A$1.55 per share from Wesfarmers Ltd (WES AU). The revised indicative offer of A$1.55 per share is a 35.4% premium to the unaffected price of A$1.145 (9 July).The proposal also allows the payment of fully franked dividends of up to 5 cents per share, including any final dividend, declared for the financial year ended 31 August. The cash consideration of the offer will be reduced by the cash component of any dividends. The revised indicative offer is also a 12.3% bump to the original offer of A$1.38 per share received from Wesfarmers on 12 July, which was rejected by the Board on 29 July. As announced in the first offer, Washington H. Soul Pattinson (WHSP), the largest shareholder who represents 19.3% of the outstanding shares, will vote in favour of Wesfarmers’ revised offer. WHSP has also granted a call option on its API shares in favour of Wesfarmers.  The Board intends to unanimously recommend the revised offer subject to the entry into a binding scheme implementation deed following the completion of confirmatory due diligence that will conclude by 16 October. The revised offer is conditional on receiving regulatory approvals and clearance from the Australian Competition and Consumer Commission (ACCC). We think that the ACCC will not have issues with the transaction. Wesfarmers aims to make API the foundation of its new Healthcare division, which will be used as the springboard to grow its presence in the health, wealth and beauty sectors. For API shareholders, we think that indicative revised offer is attractive compared to historical P/E multiples. The offer will prove attractive to shareholders who are looking for valuation certainty in an environment where API’s earnings continue to be impacted by COVID-19 related restrictions. At the last close price of A$1.48, the shares are trading at a 4.7% gross spread to the indicative revised offer.

Wesfarmers’ Revised Bid for API Gains Due Diligence Access