The Co-operative Group has sold more than 770 pharmacies to Bestway for £620m to reduce the organisation’s debt.
Bestway, the country’s second largest cash and carry operator, is due to complete on the tranasction in October following full separation of the business from the Group.
In its annual results for 2013, the Group announced that it had debts of £1.4bn and it would sell its pharmacy and farms divisions to help reduce this amount. Proceeds will also be used to invest in its businesses across the retail and consumer services divisions.
Last year, the pharmacy arm, which is the third largest in the UK, reported total revenues of £760m and operating profit of £33m. Though sales declined on the previous year by £4m.
For up to 18 months, the Group will support Bestway under a transitional services agreement. Bestway will also have the right to operate under The Co-operative Pharmacy brand for a transitional period of 12 months.
With this acquisition, Bestway will have an annual turnover of approximately £3.4 billion and a global workforce of more than 32,600 people, with over 11,900 people in the UK.
Richard Pennycook, interim chief executive of the Group, said: “The successful sale of our pharmacy business is an important move for the Co-operative Group. The proceeds will enable the Co-operative to reduce debt and invest in our business and is part of the focused delivery of our clear strategic plans and priorities.
“I am pleased that the agreement we have reached with Bestway reflects the quality of the business and the high level of interest from a number of bidders. Bestway is acquiring an excellent pharmacy business characterised by the quality and professionalism of colleagues and high levels of customer service. Bestway in return is an ideal owner, being a strong family-run group with a proven track-record of putting the needs of customers first.
“I expect the pharmacy business to go from strength to strength under the committed long-term ownership of Bestway and we look forward to working with them through the transition period.”
Zameer M. Choudrey, Bestway chief executive, said: “We are delighted to be bringing The Co-operative Pharmacy business into the Bestway family, adding to our growing and diverse business portfolio. In line with our own ethos, there is a strong focus on supporting and servicing the needs of the local communities within this business.
“The Co-operative Pharmacy is a strong, competitive business, operating in a sector where demographic trends show an increasing demand for healthcare services amongst the wider community. We see great potential to grow the business organically and through future acquisitions. We always look to take a long term approach and have a strong track record of successfully growing businesses that have previously been acquired within the group. We are confident that we will continue to do so with this business.”