Co-op Picks Banks For £600m Pharmacies Sale
The troubled Co-operative Group is set to pay millions of pounds in fees to two City advisers as it prepares the sale of its pharmacies division.
Sky News understands that the mutual, which is reeling from the loss of its chief executive last week, has appointed Rothschild and UBS to sell the UK's third-largest chain of retail chemists.
Insiders said on Wednesday that the Co-op anticipated receiving bids for the unit of somewhere in the region of £600m, meaning that the banks would be in line for fees running to several million pounds.
The sale of the pharmacies business was flagged by Euan Sutherland prior to his abrupt exit as the Co-op's chief executive following the leaking of details of his pay package to a national newspaper.
Insiders said the plan to offload the chemists and the Co-op's much smaller farming operations was unaffected by Mr Sutherland's departure.
The pharmacies unit comprises 750 outlets, employing 6500 staff and serving 200,000 customers a week.
The business has struggled because of cost-cutting within the NHS's prescription drugs budget although it is still profitable, making operating profit of £28.2m on sales of £764m in the year to January 5, 2013.
The Co-op had been due to report its 2013 results next week but said on Wednesday that it would delay its announcement until mid-April.
Lord Myners, the former City Minister who sits on the Co-op board, warned last week in an interim report on the mutual's governance and structure that it risked running out of money without urgent reforms.
He has proposed professionalising the board and abolishing the current structured of elected regional representatives.
The mutual said it was reshuffling its senior executive ranks on Wednesday, with changes across its group of businesses.
Richard Pennycook, the Co-op's interim chief executive, said:
"I am pleased to be announcing these changes to our management team, which mean we are better positioned to tackle the complex issues we face.
"We are focused on the hard work needed to complete the development of our new strategy. This is the right team to deliver that strategy in the interests of all our stakeholders - customers, colleagues and members."
The Co-op declined to comment further on the pharmacies sale.