API shares skyrocketed 16 per cent to $1.75 on Thursday as investors reacted to the offer. API shareholder Simon Conn, portfolio manager at Investors Mutual, welcomed the bid, saying he wasn’t surprised about Woolworths wanting to enter the pharmacy space.

“It looks like a very favourable offer, though I am surprised it’s taken Woolworths this long to table a bid given there’s been such a long sale process with Wesfarmers,” he said. “I think either of them will make a good owner for the business, so it’s whoever wants to pay the most.”

Woolworths’ proposal is non-binding and subject to due diligence and ACCC approval, the latter of which Mr Conn believes won’t be an issue for either Woolworths or Wesfarmers, despite the supermarket already selling a number of non-prescription healthcare products and being a major player in the beauty space.

“They don’t have a presence in the retail pharmacy markets, so I don’t think either of them will have an issue at the end of the day,” he said.

A spokesperson for the competition regulator said the watchdog was aware of the takeover proposal and would consider it once it receives a submission from Woolworths.

Woolworths has also offered to pursue an alternative transaction, such as a takeover bid with a minimum acceptance condition of 50.1 per cent, rather than the 75 per cent required by a scheme of arrangement.

This is probably in recognition of Wesfarmers’ existing 19 per cent stake in API, which it acquired through an agreement with the pharmacy’s former major shareholder, Washington Soul Patts, and which it would likely vote against a competing takeover offer.

Woolworths has long held ambitions to operate pharmacies, having first registered a trademark for “Pharmacy-in-Supermarket” back in 2003 and lobbying to change government regulations that dictate that pharmacies must be owned and operated by pharmacists.

Mr Banducci reinforced that the business would look to maintain the community pharmacy model if successful with its bid. “We would go one step further and be open to ways in which we could strengthen that model and discover what additional roles community pharmacies could play going forward,” he said.

“The rules are very clear: you can’t move a pharmacy into a supermarket. We have no plans to do that, and we don’t think it would be the right thing from a customer perspective anyway.”

A spokesperson for the Pharmacy Guild, Australia’s peak body and lobbyist for the pharmacy industry, said the Guild had a number of questions around the acquisition and would monitor it to ensure there were no negative outcomes for community pharmacies.

“How will [Woolworths] ensure the successful community pharmacy model, which is the custodian of the PBS, is protected and maintained?” they said.

“We look forward to having many conversations with the Woolworths team as well as with Prime Minister Scott Morrison and Leader of the Opposition Anthony Albanese on these important questions.”

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