* Pharmacy arm has 750 outlets, 6,500 staff
* Proceeds will help cut 1.4 bln stg debt
* Deal seen completing in October
(Adds detail, executive quotes)
LONDON, July 18 Britain's Co-operative Group
has agreed to sell its pharmacy business to the
privately owned Bestway Group for 620 million pounds ($1.06
billion), providing funds for it to cut debt and invest in its
core businesses, it said on Friday.
The deal follows a formal sale process initiated by the
mutually owned Co-op, reflecting its decision that the pharmacy
business was not part of its future strategy.
Media reports had said Bestway was expected to be named the
preferred bidder for the pharmacy business, which has 750
outlets and over 6,500 employees.
The reports had said Bestway was competing against Lloyds
Pharmacy, Alliance Boots and Carlyle.
The troubled 150-year-old supermarkets-to-funerals Co-op
group said the deal is due to complete in October, with proceeds
used to reduce its 1.4 billion pounds of debt and invest in its
core businesses across its retail and consumer services arms.
"The successful sale of our pharmacy business is an
important move for the Co-op," said Richard Pennycook, interim
group chief executive.
The Co-op lost control of its bank and slumped to a 2.5
billion pound loss last year.
Its problems stem from an ill-fated 2009 takeover of the
Britannia building society, which saddled it with a portfolio of
risky property loans during the financial crisis.
A drugs scandal involving Paul Flowers, the former chairman
of its bank, then moved the group's problems from the business
pages to the front pages.
Bestway's business includes the UK's second largest
independent wholesaler serving 125,000 independent retailers and
caterers from 64 warehouses nationwide. Its retail club business
is the largest in the UK with over 4,000 members.
The Co-op said it has agreed to provide certain services to
the pharmacy business for up to 18 months, under a transitional
Bestway will have the right to operate under the
Co-operative Pharmacy brand for a transitional period of 12
($1 = 0.5847 British Pounds)
(Reporting by James Davey; Editing by Neil Maidment)