Woolworths has pitched an $872 million takeover offer for Australian Pharmaceutical Industries, pitting the retail giant against Wesfarmers.
API on Thursday said Woolworths' offer of $1.75 per share was superior to Wesfarmers' bid of $1.55 per share.
Woolworths boss Brad Banducci said health was a large, fast-growing category and API would be a fantastic addition to the company's food and everyday needs range.
The Australian Competition and Consumer Commission will likely examine the proposal closely as API works with community pharmacy partners to serve some regions.
These pharmacies can be important in providing affordable medicines.
Yet Woolworths said it would support the community pharmacy model.
"We are not seeking to change - now or in the future - the pharmacy ownership rules requirements or location rules," the company said.
The Priceline Pharmacy owner will allow Woolworths to examine its financial accounts in order to make a binding offer.
API had entered into a merger with Wesfarmers last month after API took a 19.3 per cent stake.
API shares on the ASX were up 17.73 per cent to $1.76 at 1133 AEDT.
Woolworths shares were down by 0.43 per cent to $39.67.
Wesfarmers shares were higher by 0.65 per cent to $57.41.
