Australian Pharmaceutical Industries : Scheme Booklet

For personal use only

Australian Pharmaceutical Industries Limited

ACN 000 004 320

Scheme

Booklet

In relation to a proposal from WFM Investments Pty Ltd (a wholly-owned Subsidiary of Wesfarmers Limited) to acquire all of the remaining API Shares that WFM Investments does not already own by way of a scheme of arrangement.

VOTE IN FAVOUR

The Independent Expert has concluded that the Scheme is fair and reasonable and accordingly is in the best interests of API Shareholders, in the absence of a superior proposal.

Your API Directors unanimously recommend that you vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of API Shareholders.

This is an important document and requires your immediate attention.

You should read it in its entirety before deciding whether or not to vote in favour of the Scheme Resolution required to implement the Scheme. If you are in any doubt about what to do, you should consult your legal, financial, taxation or other professional adviser immediately.

If you have any questions about this Scheme Booklet or the Scheme, please contact the API Shareholder Information Line on 1300 103 401 (within Australia) or [phone] (outside Australia) between 8.30 am and 5.00 pm (Melbourne time) Monday to Saturday, excluding public holidays.

Financial adviser

Legal adviser

Australian Pharmaceutical Industries Limited Scheme Booklet

IMPORTANT NOTICES
only
Glossary	assumes any responsibility for the
This Scheme Booklet is important. API	accuracy or completeness of any API
Shareholders should carefully read this	Information.
Scheme Booklet in its entirety before	Wesfarmers has prepared, and is
deciding whether or not to vote in
solely responsible for, the Wesfarmers
favour of the Scheme Resolution
Information. None of API or its Related
r quired to implement the Scheme.
Bodies Corporate, or their respective
Nature of this document	directors, officers, employees and
advisers have verified any of the
This Scheme Booklet includes the
Wesfarmers Information, and none of
explanatory statement for the Scheme	them assumes any responsibility for
for the purposes of section 412(1) of	the accuracy or completeness of any
the Corporations Act.	the Wesfarmers Information.
This Scheme Booklet explains the terms	The Independent Expert, Grant
use
of the proposed acquisition of all of	Thornton, has prepared the
the Scheme Shares by Wesfarmers	Independent Expert's Report
personal
by way of a scheme of arrangement	contained in Annexure A of this
between API and API Shareholders	Scheme Booklet and takes sole
under Part 5.1 of the Corporations Act.	responsibility for that report. None of
This Scheme Booklet also sets out the	API, Wesfarmers, or their respective
manner in which the Scheme will be	Related Bodies Corporate, or any of
considered and implemented (if all	their respective directors, officers,
f the conditions to the Scheme are	employees or advisers takes any
satisfied or (if permitted) waived)	responsibility for the Independent
and provides such information as	Expert's Report.
is prescribed by law or is otherwise	API's legal adviser, Ashurst, has
material to the decision of API	prepared Section 8 of this Scheme
Shareholders whether to vote in favour	Booklet and takes sole responsibility for
of the Scheme.	that Section. None of API, Wesfarmers,
This Scheme Booklet does not	or their respective Related Bodies
Corporate, or any of their respective
constitute or contain an offer to API
directors, officers, employees or
Shareholders, or a solicitation of an
advisers takes any responsibility for
offer from API Shareholders, in any
that Section.
jurisdiction.
This Scheme Booklet is not a disclosure	No consenting party has withdrawn
their consent to be named before the
document required by Chapter 6D
date of this Scheme Booklet.
of the Corporations Act. Subsection
For
708(17) of the Corporations Act	ASIC and ASX
provides that Chapter 6D of the	A copy of this Scheme Booklet was
Corporations Act does not apply in
relation to arrangements under Part	provided to ASIC in accordance
5.1 of the Corporations Act approved	with section 411(2) and 633 of the
at a meeting held as a result of an	Corporations Act and has been
order under subsection 411(1).	registered by ASIC under section
If you have sold all of your API Shares,	412(6) of the Corporations Act. ASIC
has been given the opportunity
please disregard this Scheme Booklet.
to comment on this Booklet in
Responsibility for information	accordance with section 411(2) of the
Corporations Act.

API has prepared, and is solely	ASIC has been requested to provide
responsible for, the API Information.
a statement, in accordance with
None of Wesfarmers or its Related
section 411(17)(b) of the Corporations
Bodies Corporate or their respective
Act, that it has no objection to the
directors, officers, employees and
Scheme. ASIC's policy in relation
advisers have verified any API
to statements under section 411(17)
Information and none of them
(b) of the Corporations Act is that

it will not provide such a statement until the Second Court Date. This is because ASIC will not be in a position to advise the Court until it has had an opportunity to observe the entire Scheme process. If ASIC provides that statement, it will be produced to the Court at the Second Court Hearing. Neither ASIC nor any of its officers takes any responsibility for the contents of this Scheme Booklet.

A copy of this Scheme Booklet has been lodged with ASX. Neither ASX nor any of its officers takes any responsibility for the contents of this Scheme Booklet.

Forward looking statements and intentions

Some of the statements appearing in this Scheme Booklet (including in the Independent Expert's Report) may be in the nature of forward looking statements. Forward looking statements or statements of intent in relation to future events in this Scheme Booklet (including in the Independent Expert's Report) should not be taken to be forecasts or predictions that those events will occur. Forward looking statements generally may be identified by the use of forward looking words such as 'believe', 'aim', 'expect', 'anticipate', 'intend', 'foresee', 'likely', 'should', 'planned', 'may', 'estimate', 'potential', or other similar words. Similarly, statements that describe the objectives, plans, goals, intentions or expectations of API or Wesfarmers are or may be forward looking statements. You should be aware that such statements are only opinions and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to API or Wesfarmers and / or the industries in which they operate, as well as general economic conditions, prevailing exchange rates and interest rates and conditions in financial markets.

Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement and deviations are both normal and to be expected.

Scheme Booklet Australian Pharmaceutical Industries Limited

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IMPORTANT NOTICESTABLE OF CONTENTS

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For personal use

None of API, Wesfarmers, or their respective officers, directors, employees or advisers or any person named in this Scheme Booklet or any person involved in the preparation of this Scheme Booklet makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement. Accordingly, you are cautioned not to place undue reliance on those statements.

Any forward looking statements in this Scheme Booklet reflect views held at the date of this Scheme Booklet. Subject to any continuing obligations under the Listing Rules or the Corporations Act, API and Wesfarmers and their respective officers, directors, employees and advisers, disclaim any obligation or undertaking to distribute after the date of this Scheme Booklet any updates or revisions to any forward looking statements to reflect

1. any change in expectations in relation to such statements; or (b) any change in events, conditions or circumstances on which any such statement is based.

Not investment advice

The information contained in this Scheme Booklet does not contain or constitute financial product advice and does not take into account the investment objectives, financial situation, taxation position or particular needs of any individual API Shareholder or any other person. Before making any decision (including a decision in relation to the Scheme or in relation to API generally), you should consider, with or without

the assistance of an independent securities or other adviser, whether that decision is appropriate in light of your particular investment needs, objectives and financial circumstances. This Scheme Booklet should be read in its entirety before making a decision on whether or not to vote in favour of the Scheme. In particular, it is important that API

Shareholders consider the risks as set out in section 7, and the views of the Independent Expert set out in the Independent Expert's Report contained in Annexure A of this Scheme Booklet.

Foreign jurisdictions

The release, publication or distribution of this Scheme Booklet in jurisdictions other than Australia may be restricted by law or regulation in such other jurisdictions and persons outside Australia who come into possession of this Scheme Booklet should seek advice on, and observe, any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations. API disclaims all liabilities for such violations.

API Shareholders who are resident outside of Australia, or who are nominees, trustees or custodians for beneficial holders resident outside Australia, are encouraged to seek independent advice as to how they should proceed (including specific taxation advice in relation to the Australian and overseas tax implications of their participation in the Scheme).

This Scheme Booklet has been prepared in accordance with Australian law and the information contained in this Scheme Booklet may not be the same as that which would have been disclosed if this Scheme Booklet had been prepared in accordance with the laws and regulations of jurisdictions other than Australia. No action has been taken to register or qualify this Scheme Booklet or any aspect of the Scheme in any jurisdiction outside Australia.

Important notice associated with Court order

The fact that, under section 411(1) of the Corporations Act, the Court has ordered that the Scheme Meeting be convened, and has directed that the Scheme Booklet accompany the Notices of Scheme Meeting, does not mean that the Court:

• has formed any view as to the merits of the proposed Scheme or as to how API Shareholders should vote (on this matter API Shareholders must reach their own decision); or
• has prepared, or is responsible for the content of, the Scheme Booklet.

The order of the Court that the Scheme Meeting be convened is not, and should not be treated as, an endorsement by the Court of, or any other expression of opinion by the Court on, the Scheme.

Notice of Scheme Meeting

The Notice of Scheme Meeting is set out in Annexure D of this Scheme Booklet.

Notice of Second Court Hearing

At the Second Court Hearing, the Court will consider whether to approve the Scheme following the votes at the Scheme Meeting.

Any API Shareholder may appear at the Second Court Hearing, which is expected to be held at 10.15am on Monday, 21 March 2022 at the Federal Court of Australia (305 William Street, Melbourne, Victoria 3000). It is possible that the Second Court Hearing will be held either virtually (online only) or by telephone conference. Details on how to attend the Second Court Hearing will be released by API to ASX if the Scheme has been approved at the Scheme Meeting. API Shareholders should note that the protocols for attendance at the Second Court Hearing may change at short notice in light of developments relating to the COVID-19 pandemic. Any such change will be announced by API

to ASX.

Any API Shareholder who wishes to oppose approval of the Scheme at the Second Court Hearing may do so by filing with the Court and serving on API a notice of appearance in the prescribed form, together with any affidavit on which the API Shareholder proposes to rely. The notice of appearance and affidavit must be

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Australian Pharmaceutical Industries Limited Scheme Booklet

IMPORTANT NOTICES

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served on API at its address for service at least one day before the Second Court Hearing.

The address for service is Level 5,

250 Camberwell Road, Camberwell, Victoria 3124.

useTaxation implications of the Scheme

If the Scheme becomes Effective and is implemented, there will be taxation consequences for Scheme Shareholders which may include taxation being payable on any gain on disposal of API Shares. For further detail about the general

personalAustralian taxation consequences of the Scheme, refer to Section 8 of this Scheme Booklet.

The taxation treatment may vary depending on the nature and characteristics of each API Shareholder and the specific circumstances that apply to that API Shareholder. Accordingly, API Shareholders should seek professional taxation advice in relation to their particular circumstances.

P ivacy

API and Wesfarmers may need to collect personal information in connection with the Scheme.

The personal information may include the names, contact details and details of API Share holdings of API Shareholders, together with contact

Fordetails of individuals appointed as proxies, attorneys or corporate representatives for the Scheme Meeting. The collection of some of this information is required or authorised by the Corporations Act.

The primary purpose of the collection of personal information is to assist API and Wesfarmers to conduct the Scheme Meeting and to implement the Scheme.

This information may be disclosed to API, Wesfarmers and their respective Related Bodies Corporate and advisers, print and mail service providers, share registries, securities

brokers and any other service provider to the extent necessary to effect the Scheme, and also where disclosure is otherwise required or allowed by law.

API Shareholders who are individuals, and other individuals in respect

of whom personal information is collected, have certain rights to access the personal information collected about them. API Shareholders may contact the Share Registry if they wish to exercise these rights.

If the information outlined above were not collected, API may be hindered in, or prevented from, conducting the Scheme Meeting or implementing the Scheme. API Shareholders who appoint an individual as their proxy, attorney or corporate representative to vote at the applicable Scheme Meeting should inform that individual of the matters relating to their personal information which are outlined above. Further information about how API collects, uses and discloses personal information is contained in the API privacy policy which can be found on the API Group's website at www.api.net.au.

External websites

Unless expressly stated otherwise, the content of API's website and Wesfarmers' website do not form part of this Scheme Booklet and API Shareholders should not rely on any such content.

Interpretation

Capitalised terms used in this Scheme Booklet are defined in the Glossary in Section 10 of this Scheme Booklet, or otherwise in the sections in which they are used. Section 10 of this Scheme Booklet also sets out rules of interpretation which apply to this Scheme Booklet. Some of the documents reproduced in the Annexures to this Scheme Booklet have their own defined terms, which are sometimes different from those in the Glossary.

Charts and diagrams

Any diagrams, charts, graphs and tables appearing in this Scheme Booklet are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in diagrams, charts, graphs and tables is based on information available at the date of this document. All numbers are rounded, unless otherwise indicated.

Rounding

A number of figures, amounts, percentages, prices, estimates, calculations of value and fractions in this Scheme Booklet are subject to rounding. Accordingly, the actual calculation of figures, amounts, percentages, prices, estimates, calculations of value and fractions may differ from the figures, amounts, percentages, prices, estimates, calculations of value and fractions set out in this Scheme Booklet. Any discrepancies between totals in tables or in financial information, or in calculations, graphs or charts are due to rounding.

Financial amounts and exchange

The financial amounts in this Scheme Booklet are expressed in Australian currency, unless otherwise stated.

Times and dates

All times referred to in this Scheme Booklet are references to times in Melbourne, Australia, unless otherwise stated.

All dates following the Scheme Meeting referred to in this Scheme Booklet are indicative only and, among other things, are subject to the satisfaction or (if permitted) waiver of the conditions precedent to the Scheme.

Date of this Scheme Booklet

This Scheme Booklet is dated 14 February 2022.

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Scheme Booklet Australian Pharmaceutical Industries Limited

For personal use only

TABLE OF CONTENTS

Letter from the Chair of API...............................................................................................................................................	4
Important dates and expected timetable for The Scheme.........................................................................................	8
1.	Considerations relevant to your vote.......................................................................................................................	9
2.	Frequently asked questions.....................................................................................................................................	15
3.	Summary of The Scheme.........................................................................................................................................	24
4.	What you should do and how to vote at The Scheme........................................................................................	30
5.	Information relating to API.......................................................................................................................................	32
6.	Information about Wesfarmers and WFM Investments.......................................................................................	46
7.	Risk factors..................................................................................................................................................................	51
8.	Taxation implications................................................................................................................................................	58
9.	Additional information.............................................................................................................................................	62
10.	Glossary......................................................................................................................................................................	73
Annexure A - Independent Expert's Report.................................................................................................................	87
Annexure B - Scheme of Arrangement.......................................................................................................................	196
Annexure C - Deed Poll.................................................................................................................................................	209
Annexure D - Notice of Scheme Meeting...................................................................................................................	219
Corporate Directory.......................................................................................................................................................	225

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