Bestway Group (“Bestway”) has acquired the Co-op’s pharmacy business for a purchase price of £620m. The transaction is due to complete in October 2014, following final separation of the Pharmacy business from Co-op.
The Co-operative Pharmacy is the third largest pharmacy business in the UK, and the largest in Wales. It has some 770 branches across the UK and more than 7,000 employees. In 2013 it reported total revenues of £760m and operating profit of £33m.
The agreement follows a competitive sale process initiated by Co-op and Bestway saw off competition from the likes of Lloyds Pharmacy, Alliance Boots and Carlyle, the US buyout firm.
The sale process came about following a decision by Co-op that the Pharmacy business was not part of its future strategy. The net proceeds will be used to reduce Co-op group debt and the transaction will enable Co-op to focus strategically on its core Retail and Consumer Services Divisions.
Co-op has agreed to continue to provide certain services to the Pharmacy business for up to 18 months, under a transitional services agreement. Bestway will have the right to operate under the Co-operative Pharmacy brand for a transitional period of up to 12 months.
Bestway is the UK’s eighteenth largest privately owned company and seventh largest family-owned business.
Bestway includes the UK’s second largest independent wholesaler serving 125,000 independent retailers and caterers from 64 warehouses nationwide and with over 6 million square feet of selling space offering a product range of over 25,000 items. Bestway’s retail club business is the largest in the UK with over 4,000 members.
With this acquisition, Bestway will have an annual turnover of approximately £3.4bn and a global workforce (including its cement and banking divisions) of more than 32,600 people, with over 11,900 people in the UK.
Zameer Choudrey, Bestway Group chief executive, said: “We are delighted to be bringing The Co-operative Pharmacy business into our Group, adding to our growing and diverse business portfolio. In line with our own ethos, there is a strong focus on supporting and interacting with local communities within this sector.
The Co-operative Pharmacy operates 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 successful acquisitions, and successfully growing employee and customer bases. We are confident that we will continue to do so with this business.
On behalf of Bestway Group, I look forward to working in partnership with the management and staff at The Co-operative Pharmacy.”
Richard Pennycook, Interim Group CEO of The Co-operative Group, said:
“The successful sale of our Pharmacy business is an important move for The Co-operative Group. The proceeds will enable the group to reduce debt and is part of the focused delivery of our clear strategic plans and priorities. I am pleased we have reached agreement with Bestway, a strong family-run business that 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 advocacy. Bestway in return is an ideal owner for the Features > Business, 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”.
Rothschild and UBS acted as financial advisers to The Co-op in this transaction, with Addleshaw Goddard and Allen amp; Overy acting as principal legal advisors to The Co-operative Group.
KPMG acted as financial advisors for Bestway Group, with Hogan Lovells for Legal and JP Morgan/Nomura for Acquisition Finance.