The pitch that Wesfarmers and Woolworths have relayed to investors about improvement plans for API are remarkably similar.

Both companies have invested heavily and have enormous experience in loyalty schemes, the acquisition and use of data, supply chain management, ecommerce and logistics. So the opportunity to superimpose this infrastructure on API is clearly a value creating exercise for both companies.

And both companies have pledged to support the community pharmacy model.

That said, the influential Pharmacy Guild of Australia threatened to raise the Woolworths bid with Prime Minister Scott Morrison and Labor leader Anthony Albanese. In a statement on Thursday morning, the Guild asked, “Why is a company with interests in the alcohol, tobacco, gambling and nightclub industries wanting to move into healthcare?”

For Wesfarmers (sans Coles) acquiring API would be an entry into this sector - to use management speak - a new vertical.

For Woolworths, which already sells health and beauty products throughout its supermarkets, putting its foot on API fits within the group’s food and everyday needs “ecosystem”. It would also represent a handy defensive move to keep Wesfarmers out as a competitor.

The API suitors are evenly matched in terms of resources so, barring any regulatory intervention, it will come down to which one wants it the most and is prepared to pay the biggest price.

Woolworths has also covered off on contingencies - in particular Wesfarmers’ ownership of 19 per cent of API - a stake large enough to almost certainly block shareholders’ approval of the Woolworths offer under a scheme of arrangement.

Woolworths is prepared to alter the mechanics of its offer to a conventional bid with a 50 per cent minimum acceptance condition. It won’t rule out making a share scrip offer if that is more appealing to API’s board and shareholders.

Regardless of which one ultimately lands the winning bid, the real winners will be the API shareholders.

Before Wesfarmers came along in July API shares were trading at close to $1 and the company had just inked a strategic review aimed at improving its operations and earnings.

The shareholders have watched their stock increase 64 per cent since July. In late trading on Thursday shares were sitting at $1.74.

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