By David Winning

SYDNEY--Australian Pharmaceutical Industries Ltd. said it intends to recommend shareholders accept a revised takeover proposal from Wesfarmers Ltd. that values its equity at 763.6 million Australian dollars (US$560.4 million).

API, which owns the Priceline retail chain of pharmacies and is also a drug wholesaler, said Wesfarmers is now offering A$1.55 a share in cash after its earlier proposal of A$1.38/share was rejected as too low.

"This revised offer better reflects the strength and potential of our stable of businesses that have been built by the efforts and passion of all of our people within API," said Richard Vincent, API's chief executive.

API said it will allow Wesfarmers to undertake due diligence through October 16 to determine whether a binding offer can be made. The revised bid represents a 35% premium to API's closing price on July 9, which was the last trading day before Wesfarmers's initial offer was made known.

"Wesfarmers supports the community pharmacy model, including the pharmacy ownership and location rules," said Wesfarmers Managing Director Rob Scott. "If the proposal is successful, we see opportunities to invest to strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers."

Wesfarmers said its new proposal assumes that API's performance is consistent with earnings guidance announced on July 12, including the impact from the extension of Covid-19 restrictions beyond the end of July.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

09-15-21 2013ET