By Stuart Condie

SYDNEY--Australian Pharmaceutical Industries Ltd. said its acquisition by Wesfarmers Ltd. is on track for completion by the end of March after Woolworths Group Ltd. withdrew its 872 million Australian-dollar (US$624.9 million) proposal.

API said its scheme implementation deed with Wesfarmers remained in place for the retail and industrial conglomerate to acquire the shares it doesn't already own for A$1.55 per security.

Woolworths had proposed A$1.75 per security but Wesfarmers had said it wouldn't vote its 19.3% stake in favor of a proposal by its retail rival.

Woolworths on Friday said it had withdrawn the proposal it made last month after conducting comprehensive due diligence on the pharmaceutical distributor and retailer. It said it couldn't be sure the financial return on the acquisition would be in-line with its capital allocation framework.

Write to Stuart Condie at stuart.condie@wsj.com