The Co-operative group made the first steps today to repair its battered finances by selling its pharmacy business to billionaire Sir Anwar Pervez’s cash-and-carry empire, Bestway.
The Tory donor, who sits as Bestway chairman, paid Co-op £620 million for the 774 branches of its chemists, which is the UK’s third largest pharmacy business behind Alliance Boots and Lloyds Pharmacy.
Bestway fought off tough competition from rivals, including a handful of deep-pocketed private-equity firms, but Co-op chose the cash-and-carry firm following reassurances that the stores would remain open and jobs would be saved.
Co-op put the pharmacy up for sale earlier this year as part of a major review of its structure after it was nearly bankrupted by its banking arm, leading to a £2.5 billion loss in 2013 and £1.4 billion owed to lenders.
Interim boss Richard Pennycook is now looking to sell the company’s farming and security businesses to focus on the successful retail, funeral and insurance services.
He replaced Euan Sutherland after he resigned in March following a boardroom bust-up over governance and pay.
The deal is a huge coup for Bestway, which is said to be the 18th-largest private company in the UK, selling goods to more than 100,000 independent retailers.
It brings a new revenue stream to the business, which hit sales of £2.5 billion and underlying pre-tax profits of £220 million last year.
Chief executive Zameer Choudrey said the deal will help to diversify its business, which also includes a bank and cement business in Pakistan. He added: “In line with our own ethos, there is a strong focus on supporting and servicing the needs of the local communities within this business.”
Founder Pervez set up his business empire from a single convenience store in Earls Court in 1963. At 79 years old, he estimated to be worth £1.3 billion.
