KEY POINTS:
Life Pharmacy has warned that it is unlikely to proceed with a takeover offer for Pharmacy Brands if shareholders of that company give the green light to a rival bid at a special meeting this week.
In a letter to shareholders this week, Life's chairwoman, Liz Coutts, confirmed the company's intention to offer $9.20 a share for 100 per cent of Pharmacy Brands.
That would see NZX-listed Life take control of 210 franchise businesses. Pharmacy Brands was created in 2003 from a merger between Unichem, Amcal and Dispensary First brands.
But a rival bidder, ProPharma, has already made an offer of $8.40 for the shares of Pharmacy Brands' majority stake holder, API Healthcare.
The ProPharma offer is for API's 67 per cent stake and is not being made to all shareholders.
The Takeover Code requires that bids for majority control which are not made to all shareholders must be approved by a shareholder vote.
The vote - scheduled for a special meeting this Friday - is for shareholders holding the remaining 33 per cent stake and requires a 50 per cent majority to be carried.
"If shareholders vote in favour of ProPharma's offer then it is extremely unlikely that LPL's $9.20 offer will materialise, as ProPharma has told us it will not accept it, thereby making it impossible to satisfy the 75 per cent acceptance condition of the offer," Coutts writes in the letter.
The letter makes it clear that the shareholders must make a choice and cannot approve the ProPharma offer in the hope that two bids will progress in competition.
The vote is shaping up as a battle of proxies - for the large number of pharmacist shareholders around the country who are unlikely to attend the meeting in person.
Those proxy votes were due to be registered by 10.30am today.
Life plans to make a cash offer for Pharmacy Brands and says it will fund the takeover via the private placement to a small number of habitual shareholders.
Life shares closed unchanged yesterday at 85c.
The company owns the Life Pharmacy brand and a 49 per cent stake in 16 of the 21 Life Pharmacy stores, and one non-Life Pharmacy store.
With a market capitalisation of $26 million, it is considered an NZX minnow.
Coutts has said it can afford the takeover because its 17 stores were larger and turnover was on average higher than most of the Pharmacy Brand stores, because Life stocked a lot of cosmetics.
If Life is successful in its bid it will become one of the largest pharmacy groups in the country.
But the takeover is not likely to require Commerce Commission clearance as the group would still represent less than 25 per cent of the industry.
