(Adds details from API statement, background) July 29 (Reuters)...

(Adds details from API statement, background)

July 29 (Reuters) - Australian Pharmaceutical Industries (API) rejected on Thursday a A$680 million ($501.4 million) indicative bid from retail conglomerate Wesfarmers (WES) , saying it was opportunistic and undervalued the pharmacy chain.

Wesfarmers had tabled its bid earlier this month as it looked to foray into the pharmacy sector, and a deal would have given it access to API's distribution network of pharmaceutical and healthcare products.

"The board will only progress a change of control transaction on terms that recognise the fundamental value of API and are in the best interests of API shareholders as a whole," API said in an exchange filing.

API said its decision was based on a detailed analysis of the underlying value of the company, including its medium- and long-term growth prospects in relation to a recovery from the impact of COVID-19.

The bid comes at a time when API's bottom line has been hit by pandemic-related restrictions. So far this year, API shares have lost about 15% of their value.

Earlier this month, Wesfarmers said API's top shareholder, Washington H Soul Pattinson Co (SOL) , had indicated its support for the proposal.

Wesfarmers and Washington H Soul Pattinson did not immediately respond to requests for comment. ($1 = 1.3561 Australian dollars)