Continued national growth for Adelaide-based laser clinic operator SILK will be cultivated under the watch of a Wesfarmers subsidiary if shareholders agree to a $180 million takeover offer.

Announced today, Australian Pharmaceutical Industries (API) has entered into a deal with Norwood’s SILK Laser Clinics under which it would acquire the entirety of the business for $3.35 cash per share. This followed an initial bid in April.

Founded by Adelaide-based managing director and CEO Martin Perelman in 2009 who established the first clinic in Hyde Park, SILK Laser Clinics has since expanded nationally via acquisitions and organic growth and listed on the Australian Stock Exchange in 2020. Last year the company was ranked 49 on InDaily’s South Australian Business Index of the top 100 South Australian companies in 2022.

The deal would see wholly-owned Wesfarmers subsidiary API – the owner of the Priceline and Soul Pattinson Chemist brands – take full control of SILK. The latest $3.35 per share bid follows a $169 million ($2.42 per share) offer in April from API, and matches a takeover proposal from EC Healthcare in May.

Though EC’s bid was also $3.35 cash per share for the entirety of SILK, the target still determined API’s latest tilt to be “superior” considering certainty provided by the suitor and the ability to execute the deal “on terms acceptable to the SILK Board” which has unanimously recommended the deal to shareholders.

“Wesfarmers Health represents a logical, long-term owner for the SILK business, with the expertise and capacity to support continued growth for SILK and its franchise partners,” SILK chairman Boris Bosnich said.

“The API offer provides certainty for shareholders, and we have been pleased with the alignment between the businesses seen through due diligence.”

In addition to the cash component of the proposal, SILK will have the discretion to pay shareholders a fully franked dividend of up to a maximum of 10 cents per share, though the payout of $3.35 per share would be reduced by any such dividend.

The takeover bid represents an “attractive” premium of 38.4 per cent to SILK’s closing price of $2.42 per share on 19 April – the last trading day prior to the announcement of API’s original bid.

Managing director of Wesfarmers’ health division – which also includes Clear Skincare, Club Premium, Pharmacist Advice and Pharmacy Best Buys – Emily Amos said that SILK would complement the existing portfolio, “providing scale and efficiency benefits through an expanded presence in the attractive and growing market for aesthetics products and services”.

“Wesfarmers Health’s acquisition of SILK would provide SILK franchisees and business owners with the benefits associated with being part of a broader healthcare, wellness and beauty network and access to capital to support future growth,” Amos said.

“The due diligence process highlighted strong operational and cultural alignment between our businesses, and should the scheme be successful we look forward to working with the SILK team and SILK’s franchise partners to support their customers and deliver continued growth.”

The proposed deal is conditional on shareholder approval as well as court and regulatory approval from the Australian Competition and Consumer Commission and the New Zealand Commerce Commission.

It is expected that shareholders will get their say on the proposal at a meeting in October 2023. Once all conditions are satisfied, the takeover will be effective by the end of November this year.

For SILK, the deal follows solid financial results in the first half of the 2023 financial year, with the company delivering a 21 per cent increase in revenue to $49 million in the six months ending 31 December 2022.

In addition, profit after tax was up 22 per cent to $5 million, and the number of clinics rose by 20 to 142 which performed 2.2 million treatments in the first half.