Troubled Co-op sells its 774 pharmacies for £620m

Pharmacy business employs 7,000 staff, and last year generated revenues of £760m

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The Co-operativeThe Co-operative Group has sold its pharmacy stores for £620 million 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 £760 million and profits of £33 million.

It was put up for sale in February by former Co-op chief executive Euan Sutherland as it was not considered a core part of the business.

Bestway's wholesale business is the second largest in the UK with annual sales of more than £2.4 billion, 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 £3.4 billion 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."

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 £1.5 billion hole in its balance sheet, drove the group to an overall loss of £2.5 billion for the last year.

Interim chief executive Richard Pennycook said the deal will enable the Co-op 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."
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