Retail in brief | API, CVS Health, McKesson

Retail in brief | API, CVS Health, McKesson

6 August 2021 - Deborah Wilkes

Australian Pharmaceutical Industries (API) has rejected a takeover offer from Wesfarmers, while CVS Health and McKesson have released financial results.

API rejects offer from Wesfarmers

Australian Pharmaceutical Industries (API) has rejected a AUD687 million (USD505 million) takeover offer from Australian conglomerate Wesfarmers.

Commenting on the decision, API said its board had “unanimously concluded” that the offer “undervalues API, is not compelling and is not in the best interests of API shareholders”.

Wesfarmers announced on 12 July 2021 that it had submitted a takeover proposal to API which owns the Priceline Pharmacy chain as well as the Soul Pattinson Chemist and Pharmacist Advice brands (click here to read the News story).

Rob Scott, managing director of Wesfarmers, said the acquisition of API would provide an “attractive opportunity to enter the growing health, wellbeing and beauty sector”.

“If the Proposal is successful,” added Scott, “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.”

Wesfarmers noted that API’s major shareholder – Washington H. Soul Pattinson and Company, which has a 19.3% stake – had agreed to vote in favour of the proposed takeover.

At the time, API said its board had started an assessment of the “unsolicited, non-binding, conditional indicative proposal”.

API pointed out that its portfolio of pharmacy distribution, health and beauty retail, and skincare businesses had “attractive characteristics” and were “well positioned for growth in a number of areas”.

CVS Health releases second-quarter results

CVS Health’s Retail/LTC business reported sales of USD24.7 billion in the second quarter of 2021, representing a rise of 14.2% compared to the same period a year earlier.

The US-based healthcare company said growth had been driven by increased prescription volume; COVID-19 vaccinations and diagnostic testing; and higher front store revenues across all product categories.

CVS Health noted that the comparison was with the second quarter of 2020 when sales had been adversely impacted by the COVID-19 pandemic.

Adjusted operating income at the Retail/LTC business increased by 93.9% to USD2.05 billion.

The Retail/LTC business houses the CVS Pharmacy retail chain and the company’s services to long-term care facilities.

CVS Health’s total sales – including its Health Care Benefits and Pharmacy Services businesses as well as Retail/LTC – rose by 11.1% to USD72.6 billion in the second quarter of 2021.

McKesson announces first-quarter results

McKesson’s International segment – which houses its Canadian and European businesses including the Lloydspharmacy retail chain – reported sales down by 3% on a currency-adjusted basis to USD9.2 billion in the three months ended 30 June 2021.

The US-based healthcare company said the fall was primarily due to the transfer of its German wholesale business to a joint venture with Walgreens Boots Alliance (WBA).

The two companies announced in December 2019 that they planned to form the joint venture (click here to read the News story). Completion was announced on 2 November 2020 (click here to read the News story).

Adjusted operating profit for the International segment was up by 107% on a currency-adjusted basis to USD151 million.

McKesson announced in July 2021 that it had agreed to sell McKesson Europe’s businesses in several countries to German wholesaler and retailer Phoenix and was exploring strategic alternatives in a number of other countries including the UK (click here to read the News story).

The company’s total sales – including its US Pharmaceutical, Medical-Surgical Solutions and Prescription Technology Solutions businesses as well as the International business – increased by 13% to USD62.7 billion in the quarter.

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