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Pharmacist consortium raises £40m to buy Co-operative Pharmacy

Consortium receives “phenomenal” response as it aims to raise £60m to negotiate sale with Co-operative Group

Pharmacists have pledged more than £40 million to buy the Co-operative Pharmacy, according to a consortium of business owners.

The Co-op Consortium, which is unrelated to the Co-operative Group, said it needed to secure £60m from pharmacists before it could start negotiations with the group to buy its 782 branches.

The consortium said the response from pharmacists had been "phenomenal", with over £40m pledged towards the investment fund since it launched its website last week (April 15). Once the consortium had "gained enough traction", it would release its business plan and strategy to investors, it wrote on its website.

The Co-op Consortium is looking to secure £60m from pharmacists before it can start negotiations to buy the Co-operative Pharmacy

More on the Co-operative Pharmacy

Pharmacy 'not part' of Co-operative's future strategy

US companies likely to 'make a play' for Co-op pharmacies

Co-operative considers selling its pharmacy business

The fund was aimed primarily at pharmacists and pharmacy support staff, although it could be open to other health professionals and investors, the consortium said. It was currently accepting pledges of any amount, with the average investor pledging around £20,000. One pharmacist had promised £1.5m, it said.

Pharmacy management consultant Kulvinder Chaggar, who set up the consortium, told C+D that investing in the fund was a "great opportunity" for pharmacists to "step up" after the Co-operative announced last week (April 17) it was considering selling its pharmacies.

Mr Chaggar had enlisted a team of senior managers currently working in the sector who will be able to oversee the running of Co-operative Pharmacy if the bid is successful, he said. However, he would not reveal their names as the bid was still at an "early stage".

Mr Chaggar has also been in contact with two investment banks that would be able to assist with the transaction once funding reaches a certain level, he added.

The Co-operative told C+D yesterday (April 23) that it was still "exploring options" regarding whether to sell its pharmacies.


Why are pharmacists investing?

The consortium has not calculated the interest rate pharmacists could expect from their investment, but it said initial calculations look "healthy" and "comparable to other investment vehicles".

Investors would not automatically be entitled to a job at one of the pharmacies if the deal was successful, but they would have a say in how the company is run, it said.

No pharmacist who had pledged money will be expected to pay up until the target has been reached and a fund has been created, the consortium stressed.

However, the consortium claimed the Co-operative Group was already in the preliminary stages of selling its pharmacies and that the transaction was intended to be completed in four to six months. There was a "sense of urgency" in reaching its £60m target, as competitors had expressed an interest in buying the branches, the consortium said.

The consortium said it had the advantage of "strength in numbers", as it believed the Co-operative would be more willing to sell its pharmacies to a single buyer. "The breakup value would not yield the kind of return that an intact chain would," it added.

Last week, the Co-operative revealed that pharmacies were not part of its future strategy, despite an 18 per cent rise in profits from its pharmacy business in 2012-13. Overall pharmacy sales dropped by £4m over the same period.

Would you be interested in investing in the consortium?
We want to hear your views, but please express them in the spirit of a constructive, professional debate. For more information about what this means, please click here to see our community principles and information

shelton magunje, Community pharmacist

The fact that pharmacists pledge investment in this scheme without even seeing the CO-OP's accounts says a lot about them as "business people".

Gerry Diamond, Primary care pharmacist

Co-op Pharmacy would best be run by a sizeable independent chain keep the market dynamic.

PETER OWUSU ANSAH, Community pharmacist

Hi Gerry, long time no see! Do you know if Co-Op will sell individual stores rather than as a chain?

RAJ RAI, Community pharmacist

Well done the effort should be applauded

London Locum, Locum pharmacist

They have raised exactly £0. It's a pledge and just a pledge. the same way MPs pledge to act honestly and with integrity.

I smell a smash and grab of investments.


Capialist Society!

ROBERT SHODUNKE, Community pharmacist

@ Mesit Ozil,..Do you want them to sell it for nothing?? or hard earn Fund from investor not to provide dividends, This is the world we live in for now .

Calum Nelson, Locum pharmacist

Put me down for a tenner. How much does that get me? If the former chairman of the Co-Op bank is anything to go by, it's about a quarter of a gram.

Dave Nickels, Community pharmacist

I'd be very surprised to see this come off.. it would only take a few people not being able to raise the funds for the whole thing to fall flat on its face.. you then have arguments about investment vs dividends.. how quickly certain members want paying back etc.. who runs what, with what discounts and suppliers.. not an easy task at all

Super Locum,

Had a fax from this constortium whilst working at pharmacy today....put it in the bin.

ROBERT SHODUNKE, Community pharmacist

It is your loss....Most probably going to be a good investment, The bank is bank rolling the 90% of the purchase @ Hodgeson


Had a fax from this constortium whilst working at pharmacy today....put it in the bin

The recycling bin I hope? LOL

Clive Hodgson, Community pharmacist

Interesting idea but I think raises a lot more questions than answers. Most probably it will come to nothing. Negotiations between the Co-Op and prospective purchasers are most probably well underway. The Co-Op would like a quick sale to shore up its accounts.
It would be very difficult for a group like this to have their offer taken seriously given they have sprung from nowhere with little financial or management history…..certainly nothing on this scale. They would also have to convince the banks to lend £100s millions (Co-Op pharmacies valued circa £600M) and even if successful they would have this huge financial millstone round their necks.

Assuming this bid was successful wouldn’t the result be just one multiple being replaced by another multiple? Not sure why this would improve the lot of the Co-Op Pharmacists.

Rajive Patel, Community pharmacist

Very vague - too vague to be anything yet.

Rajive Patel, Community pharmacist

I think the other thing is the quality of the pledge. It is easy to say someone will pledge money, but when you are talking about £1000's of pounds of investment, I am sure that person needs to see the finer details. The details that need to be seen are:

1. Target Price
2. Quality/Track Record of Management Team
3. Level of Equity offered
4. Governance Structures

Therefore, whilst noble in principle, I am sure Investment Bankers would not engage in facilitating a transactions, without hard funds or proof of funds in place.

Good story, however!

RAJ RAI, Community pharmacist

If the government can bail out banks,help first time buyers with deposits does it not make sense for all pharmacists to lobby MPs to bring about a scheme to help pharmacists. This group can be bought out by aspiring individual least it won't be foreign owned. We need more independents and this could be way forward.

Chijioke Agomo, Locum pharmacist

Yes. This is a good effort. If the profession has the will, then this can work!

London Locum, Locum pharmacist

That won't happen because the government like the public think all pharmacists are greedy contractors

Paul Miyagi, Information Technology

Absolutely right. Give the youngsters a chance.

Rajive Patel, Community pharmacist

I also agree, the principle is noble. However, the proof of the pudding is in the eating. Getting together a consortium of pharmacists does not guarantee input by these pharmacies on an operational level. There is no guarantee of employment etc etc.

I would say if the model would work if 600 pharmacists (not existing contractors but locums/employee pharmacists) got together and bought outright. Each pharmacist being responsible for one store. This way there is a true progression from employee status to ownership status, where each contributor would have direct input into the business.

To me, this is simply an airy fairy idea, almost opportunistic, where a management consultant smells some profit and is trying to sell the idea of ownership to an employee pharmacist in an effort to secure funds to make a deal happen, and well....make a tidy profit personally.

The best way here, would be a management buy out, with private equity backing. It is simple and clear cut, and offers existing management and employees a chance to share in the success of a company they already serve in.

John Randell, Non Pharmacist Branch Manager

if we where given a stake in a pharmacy near my area that i would own and have a say according to my contribution...then im in....

Clive Hodgson, Community pharmacist


Pledges of £60m are not the same as £60m sitting on least to a prospective lender. There is no indication of where the further £540m+ will be coming from.

More you look at this the less viable it becomes.

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