Dozens of pharmacies face collapse as Wesfarmers walks away from $400m deal
More than 54 commercial property premises across the country are in limbo after retail giant Wesfarmers reportedly pulled the plug on a last-minute rescue deal for Priceline Pharmacy’s largest franchisee, Infinity Pharmacy Group.
The eleventh-hour decision in December saw stores placed under external administration, with creditors now facing a staggering debt exceeding $400 million.
Wesfarmers, the powerhouse behind retail behemoths such as Kmart and Bunnings, cemented its control over the Priceline Pharmacy chain and its drug wholesaling arm in 2022, following a $774 million acquisition of Australian Pharmaceutical Industries (API).
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Sources and documents sighted by The Australian Financial Review reveal that Wesfarmers was on the cusp of injecting equity into Infinity Pharmacy Group.
The proposed plan involved a significant debt reconfiguration and the establishment of a new management company to stabilise the struggling franchisee.
More than 50 stores were placed into receivership in December, with creditors now owed more than $400 million.
However, the Australian conglomerate abruptly called off these plans, subsequently initiating the receivership process for the 54 Infinity-operated stores in December.
Wesfarmers Health chief customer officer Richard Pearson described the move as “unavoidable” at the time.
In an email to Priceline franchise partners, Mr Pearson stated, “As many of you are aware, we have worked tirelessly with the Infinity Pharmacy Group (Infinity) over many years to support them to trade through significant financial challenges.”
He further elaborated, “Despite these efforts, Infinity’s failure to meet their financial obligations over a prolonged period, as well as their worsening debt position, has placed them in an untenable situation, threatening their ability to continue trading.
“This situation has highlighted the risk of debt-fuelled pharmacy network growth, which has now compromised the viability of Infinity’s operations.”
The major banks are among creditors, with Westpac, NAB and Commonwealth Bank reportedly owed about $145 million.
The financial fallout is substantial, with secured lenders reportedly owed more than $400 million.
Australian Pharmaceutical Industries alone is owed $110 million, while major banks, including Westpac, NAB, and Commonwealth Bank, are collectively owed approximately $145 million.
A first creditors’ meeting was convened on December 31, last year.
KPMG has been appointed as receivers, working in conjunction with Teneo, who are acting as voluntary administrators.
Both firms are reportedly collaborating to facilitate the sale of Infinity’s entire 91-store pharmacy network.
According to The Australian Financial Review, the sale process has already garnered interest from several parties, including rival pharmacy groups Chempro and Sigma Healthcare. Chempro had reportedly made an indicative offer to acquire Infinity stores in Queensland and New South Wales approximately a year ago.
