The Co-operative Group ("The Co-operative") announces today that it has entered into an agreement to sell its Pharmacy business to Bestway Group ("Bestway"), for a purchase price of £620 million*. The transaction is due to complete in October 2014, following the fulfilment of a number of required steps to separate the Pharmacy business from The Co-operative.
The agreement follows a formal sale process initiated by The Co-operative reflecting its decision that the Pharmacy business was not part of its future strategy. The net proceeds will be used to reduce The Co-operative’s debt and invest in its core businesses across its Retail and Consumer Services divisions.
The Co-operative has agreed 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 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.
Bestway’s Cement division is Pakistan’s second largest cement manufacturer with an annual capacity of 6 million tonnes. Bestway’s banking division is Pakistan’s second largest private bank with assets under management of US$10.3 billion and a branch network of over 1,400 branches serving over five million customers.
Bestway has built up a successful global business over 40 years by investing in and connecting with the communities it serves. The philanthropic arm of the group, the Bestway Foundation, annually donates 2.5 per cent of its post-tax profits to social projects in the countries in which it operates.
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 Group Chief Executive 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 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 Group 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.
“On behalf of Bestway Group, I look forward to working in partnership with the management and staff at The Co-operative Pharmacy.”
Rothschild and UBS acted as financial advisers to The Co-operative Group in this transaction, with Addleshaw Goddard and Allen & Overy acting as principal legal advisors to The Co-operative Group. KPMG acted as financial advisors for Bestway Group on this transaction, with Hogan Lovells for Legal and JP Morgan/Nomura for Acquisition Finance.
For further information contact:
The Co-operative Group
Russ Brady / Catherine Turner
Tel: 07880 784442 / 07834 090783
Susanna Voyle / Jonathan Sibun
Tel: 020 7353 4200
Tel: 020 84531234
Jonathan Glass/Craig Breheny
Tel: 020 74045959
Notes for editors:
* the purchase price of £620m is the enterprise value attributed to the business on a cash and debt free basis
The Co-operative Pharmacy is the third largest pharmacy business in the UK, and the largest in Wales. It has over 770 branches across the UK and over 7,000 employees. In 2013 it reported total revenues of £760 million and operating profit of £33 million.
The Co-operative Group is the UK’s largest mutual business, whose purpose is “Championing a better way to do business for you and your communities.” Owned by over eight million members, The Group operates a total of 4,500 outlets, with around 87,000 employees and has an annual turnover of £11 billion with interests across food, funerals, insurance and legal services.
Founded by Sir Anwar Pervez OBE HPk, the Bestway Group is the UK’s seventh largest family owned entity, with businesses in multiple sectors both in the UK and abroad. With this acquisition, the Group will have an annual turnover of approximately £3.4 billion and a global work force of more than 32,600 people with over 11,900 people in the UK.
Its wholesale business is the second largest operator in the UK with an annual turnover in excess of £2.4 billion and profit before tax of £53.5 million. It serves 125,000 independent retailers and caterers from 64 warehouses nationwide with over 6 million square feet of selling space offering a product range of over 25,000 items. The group’s retail club business is the largest in the UK with over 4,000 members consisting of 1,113 Best one stores and 2,895 Xtra Local retailers.
Its cement manufacturing business, set up from scratch, is now the second largest in Pakistan with an annual capacity of 6 million tonnes and over 3,000 employees. It has a turnover of US$282 million and profit before tax of US$105 million. The company is also the largest exporter of cement to Afghanistan and India.
Its banking division, United Bank Limited, is the second largest private bank in Pakistan with assets under management of US$10.3 billion and profit before tax of US$292 million. A workforce of 17,700 employees operate its network of 1,400 branches serving over five million customers. It pioneered the introduction of branchless banking in Pakistan with UBL Omni which currently has 16,000 agents. It has been voted Banker Magazine’s ‘Bank of the Year’ for two successive years.