Wesfarmers Abandons $400M Deal, Dozens of Pharmacies at Risk
Wesfarmers has officially abandoned a $400 million rescue deal, affecting dozens of pharmacies. This decision has left over 54 commercial properties in uncertainty after the abrupt withdrawal from negotiations concerning Infinity Pharmacy Group, its largest franchisee. In December, these stores were placed under external administration, straining the creditors with massive debt.
Background on Wesfarmers and Infinity Pharmacy Group
Wesfarmers, known for its ownership of retail giants like Kmart and Bunnings, had previously taken control of the Priceline Pharmacy chain and its wholesaling arm through a significant $774 million acquisition of Australian Pharmaceutical Industries (API) in 2022. However, the recent events have put the future of these pharmacies in jeopardy.
Failed Rescue Negotiations
According to sources, Wesfarmers was on the verge of investing in Infinity Pharmacy Group. Plans included restructuring the debt and creating a new management company aimed at stabilizing operations. Unfortunately, the plans were abandoned, leading to the receivership of over 50 stores.
Financial Consequences for Creditors
The fallout from this decision is considerable. Creditors are faced with a staggering debt exceeding $400 million, including:
- Australian Pharmaceutical Industries: $110 million owed
- Major banks (Westpac, NAB, Commonwealth Bank): approximately $145 million collectively owed
Richard Pearson, Wesfarmers Health chief customer officer, identified the move as “unavoidable” and emphasized that the decision was not made lightly. The management of Infinity Pharmacy Group had expanded aggressively, incurring costly, high-interest debt, which ultimately restricted its ability to meet financial obligations.
Ongoing Operations Under Receivership
As receivership was initiated in December, KPMG was appointed to oversee the process, partnering with Teneo as voluntary administrators. Even during these challenging times, operations at Infinity’s stores have continued relatively smoothly. Employees are being compensated, and customers can access essential services without significant disruption.
Conclusion
The recent developments regarding Wesfarmers and Infinity Pharmacy Group highlight the precarious position of many community pharmacies in Australia. With significant debts and management challenges, the future of these pharmacies remains uncertain. The decision to abandon the $400 million deal may reshape the pharmacy landscape in the coming months.
