Why the Wesfarmers (ASX: WES) share price has been the focus of attention this week
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It was a big week for the Wesfarmers Limited (ASX: WES) share price.
Investors have been keeping a close eye on shares in the Australian conglomerate after various headlines.
Let’s take a look at why the Wesfarmers share price received special attention last week.
What’s in the headlines?
Wesfarmers grabbed the headlines this week following its ‘sweet’ takeover offer Australian Pharmaceutical Industries Ltd (ASX: API).
The conglomerate has offered to buy 100% of the outstanding shares of API at a price of $ 1.55 per share under a revised arrangement.
At the time, the new Wesfarmers offer represented a 22% premium on the API closing price. Overall, the new auction values API equity at around $ 764 million.
The API Board unanimously recommended the revised offer, subject to the signing by the parties of a binding program implementation act.
According to Australian Financial ReviewIn the Street Talk section, Wesfarmers has already started their due diligence which will take about 4 weeks.
Before proceeding, the deal also requires clearance from the Australian Competition and Consumer Commission (ACCC).
Wesfarmers made clear their intention to expand into the beauty and pharmacy business earlier this year.
The conglomerate filed a $ 687 million takeover bid for API in July, which was rejected by the drug company.
The renewed API offering has also renewed speculation about other acquisitions that Wesfarmers could pursue.
Wesfarmers Share Price Snapshot
Until recently, the Wesfarmers share price had had an exceptional year. However, in the past 3 weeks, shares of the conglomerate have fallen more than 14% from their record highs.
The sale coincides with the publication of the company’s annual report for fiscal year 21.
Wesfarmers saw a 10% increase in revenue and an 18.8% jump in EBIT from continuing operations.
Other highlights from the company’s annual report include:
- EBIT (after interest on lease debt) up 20.7% to $ 3,550 million;
- Net income after tax increased 16.2% to $ 2,421 million;
- Operating cash flow down 25.6% to $ 3,383 million;
- Fully franked dividend of 178 cents per share for a full year, up 17.1% year on year; and
- Proposal for $ 2.3 billion or $ 2.00 per share return of capital to shareholders.
Despite the drop last month, the Wesfarmers share price remains over 12.5% higher for the year.
Shares of the conglomerate closed Friday’s trading session at $ 57.28, up 0.53% on the day.