The Co-operative Group has sold its pharmacy stores for £620m 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 to pay 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 is completed 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 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 £2.4bn, serving 125,000 independent retailers and caterers from 64 warehouses.
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.
The Co-op’s 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 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.