The Co-operative Group has agreed to sell its pharmacy business to privately owned Bestway for £620m, using the funds to slash its huge debt and invest in its core business across its consumer and retail divisions.
The UK's biggest mutually owned company has reacted to its biggest-ever loss, amounting to £2.5bn for 2013, by making cost-cutting a priority across the board and the sale of the pharmacy business reflects that.
"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," said interim chief executive Richard Pennycook.
The troubled mutual also wants to cash in on its farms business and is undergoing a significant overhaul following an especially difficult scandal-ridden period in its history.
Announcing the deal today, which is set to formally go through in October, the Co-op said it would be providing certain services to Bestway for the next year and a half under a transitional services agreement. As part of the agreement, the Bestway group, which has major businesses across food wholesale, cement manufacturing, banking and healthcare, will be able to operate under the Co-operative Pharmacy brand for a period of 12 months following the deal going through.
"Bestway is acquiring an excellent pharmacy business characterised by the quality and professionalism of colleagues and high levels of customer service," said Pennycook.
The business is one of the UK's largest pharmacy chains, which over 770 outlets and over 6,500 employees.
Bestway is the UK's 18th largest privately owned company and seventh largest family-owned business, and according to the firm's chief executive Zameer Choudrey, plans to grow the pharmacy even further.
"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," he said.