BENGALURU: Australian Pharmaceutical Industries (API) said it had received an indicative buyout proposal from supermarket giant Woolworths, which valued the pharmacy chain at A$862.2 million ($613 million) and topped Wesfarmers’ bid.

API said on Thursday Woolworths’ proposal was “reasonably capable of being valued, implemented and completed in accordance with its terms” and decided to allow Australia’s biggest supermarket chain to undertake confirmatory due diligence to make a final offer.

Woolworths’ indicative offer of A$1.75 per share in cash was above that of retail conglomerate Wesfarmers’ A$1.55 per share cash bid, and represents a 17% premium to API’s last close of A$1.49.

“There is a compelling strategic rationale to support Woolworths Group’s acquisition of API,” Woolworths Group’s Chief Executive Officer Brad Banducci said in a statement.

“The combination of the two businesses is expected to lead to material shared benefits and synergies, much of which will be reinvested back into strengthening and growing API and its pharmacy partners.”

Woolworths’ offer comes just weeks after API signed an agreement with Wesfarmers for the retail conglomerate to buy all its shares, emerging as the winner of a bidding war with Sigma Healthcare.