By Stuart Condie

SYDNEY--Wesfarmers Ltd. opposes retail rival Woolworths Group Ltd.'s 872 million Australian dollar (US$621.8 million) approach for Australian Pharmaceutical Industries Ltd. and said it believes its proposal to acquire the pharmaceutical distributor is in shareholders' best interests.

Wesfarmers on Wednesday said it holds a 19.3% stake in API and would not vote in favor of any scheme that would give Woolworths control. It won't accept any takeover offer by the supermarket chain operator.

Woolworths this month made an all-cash proposal worth A$1.75 per API share, surpassing Wesfarmers' A$1.55 per share proposal previously recommended by the API board. Both retailers are seeking to bolster their presence in the burgeoning health and wellbeing market.

Wesfarmers has the right to match any proposal that API, which also operates the Priceline pharmacy chain, deemed superior.

"We're committed to supporting pharmacist owners, many of whom operate small businesses, to grow their pharmacies over time. This includes growth in prescription medicines, along with growth in services and broader non-prescription health, personal care and beauty products," Wesfarmers Managing Director Rob Scott said.

Wesfarmers, which owns assets including discount department store Kmart and 4.9% of Coles Ltd., said it would keep Priceline customer data separate from its existing loyalty program. It said this was a response to pharmacist and franchisee concern over significant product overlap between outlets.

"This assurance provides API and its community pharmacists, including current and future Priceline franchisees, with comfort that their customer data will be protected from supermarket competitors," Wesfarmers said.

Shares in API last traded at A$1.71.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

12-14-21 1719ET