September 23 2014 Latest news:
Friday, July 18, 2014
The Co-operative Group has sold its pharmacy stores for £620million in a deal with the company behind convenience shop brand Best-one.
The struggling mutual will use the proceeds from Bestway Group’s purchase of Britain’s third largest pharmacy chain on paying down debt.
Bestway, which is the UK’s seventh largest family-owned business, will have the right to operate under the Co-operative Pharmacy brand for a transitional period of 12 months, once the deal completes later this year.
The pharmacy business has more than 770 branches in the UK with 7,000 staff, and last year generated revenues of £760m and profits of £33m.
It was put up for sale in February by then Co-op chief executive Euan Sutherland as it was not considered a core part of the business.
The business has a substantial presence in East Anglia, including three pharmacies in Lowestoft and others in Carlton Colville, Diss, Halstead, Haverhill and Saffron Walden.
However, the deal does not cover the eight pharmacy stores operated in Ipswich, Felixstowe, Saxmundham and Stowmarket by the East of England Co-operative Society which is a separate organisation from the Co-operative Group and continues to trade successfully.
Bestway’s wholesale business is the second largest in the UK with annual sales of more than £2.4billion, serving 125,000 independent retailers and caterers from 64 warehouses. Its retail club business has more than 4,000 members consisting of 1,113 Best-one stores and 2,895 Xtra Local retailers.
Founded more than 40 years ago by Sir Anwar Pervez, the business is the second largest cement manufacturer in Pakistan, where it also has a substantial bank branch network.
Following the pharmacy acquisition, Bestway will have annual turnover of around £3.4bn and a workforce of more than 32,600 people, including 11,900 in the UK.
Chief executive Zameer Choudrey said there was potential to grow the pharmacy business organically and through future acquisitions.
He added: “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.”
Besides foods stores, other businesses in the Co-op Group include funeralcare, legal services, travel and general insurance. Its banking arm, which is now under the control of bondholders as part of a refinancing to fill a £1.5bn hole in its balance sheet, drove the group to an overall loss of £2.5bn for the last year.
Interim chief executive Richard Pennycook said the deal would enable the group to invest in its core retail and consumer-facing businesses.
He added: “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.”