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The sale of the Co-operative Group's pharmacies to food wholesaler Bestway Group is proof of the healthy state of the market, business experts have said.
Bestway's announcement last week (July 18) that it would buy the Co-operative Group's 771 pharmacies for £620 million showed how attractive the sector was to potential buyers, said brokerage group Christe + Co.
"The acquisition underlines the strength of the market at present, with new buyers and lenders keen to invest in the sector," Christie + Co director Matthew Williamson told C+D.
UK-based Bestway has no track record in community pharmacy – although it does own businesses across food wholesale, cement manufacturing and banking – but Mr Williamson said it was well funded and experienced at running businesses across a number of sites.
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Michael Thomas, a partner at economic analysts AT Kearney, acknowledged Bestway – which had a turnover of £2.5bn in 2013 – seemed keen to grow the pharmacy business and was unlikely to turn the branches into "convenience stores".
He said the company already had a "degree of capability" because of its existing logistics network, but warned pharmacies were "complicated animals" that would require a "dedicated focus" to ensure success.
"Pharmacy is a really challenging place to be and the future of pharmacy in the UK [needs to be] very slick in terms of operations. It's going to take a lot to make sure [Bestway] gets a proper return on its investment," Mr Thomas told C+D.
As part of the deal, Bestway can operate under the Co-operative Pharmacy brand for a year after the acquisition and the Co-operative Group will provide certain services to the business for up to 18 months under a transitional services agreement.
Both Mr Williamson and Mr Thomas agreed that it would be "business as usual" for Co-operative Pharmacy employees once the business was transferred in October.
"Initially it will be seamless for employees. [Bestway] is robust in terms of staff retention [and] the Co-operative has a very unique ethic," Mr Thomas said. "Culturally there are common themes."
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What is Bestway?
Founded by Sir Anwar Pervez, who opened his first convenience store in London in 1963, the Bestway Group is now the UK's seventh largest family-owned business and the eighteenth largest private company.
The group had a £2.5 billion turnover in 2013, with a portfolio that includes ‘cash and carry' businesses and food wholesale operations across the UK, as well as Pakistan's second largest private bank and cement manufacturer.
It employs more than 32,600 people on four continents, including more than 11,900 in the UK.
Chief executive Zameer M Choudrey said the group saw "great potential" to expand the Co-operative's pharmacies "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 been acquired," he said.
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How do you think Bestway's purchase will affect the sector?
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