Financial News

  • 31 July 2014, 13:47

Co-op Revamp Goes On With Security Arm Sale

The restructuring of the Co-operative Group is poised to continue with the sale of its security arm in a deal that will raise money to help shore up its troubled finances.

Sky News understands that the UK's biggest mutual is in exclusive talks to offload Sunwin Services Group, which provides IT, security and other functions to its retail network across the country, employing roughly 1,500 people.

The party with which the Co-op is in discussions is understood to be Cardtronics, a Nasdaq-listed group which describes itself as the world's largest non-bank operator of cash machines.

A deal, which could be struck within weeks, is likely to be worth tens of millions of pounds, although the precise value was unclear on Wednesday.

In a statement, a Co-op spokesman said: "We can confirm that we are in exclusive talks over the sale of Sunwin Services Group which may or may not lead to the sale of the business.

"As part of our ambitious programme of transforming the Co-operative Group we have concluded that Sunwin is non-core as a non-member-facing business."

Sunwin's security operation is focused on providing support for staff as they transfer cash around the Co-op network, although the business has its roots in the mutual's TV rental and repair business, which was founded in 1954.

It now offers other services, including in areas such as IT and the installation and monitoring of fire and burglar alarm systems.

News of the exclusive talks with Cardtronics comes less than a fortnight after the Co-op sold its pharmacies division to Bestway, the cash-and-carry-operator for 620m.

The Co-op is continuing with a process to sell its farming interests, although it decided to abandon an auction of its insurance operations earlier this year.

Richard Pennycook, the Co-op's interim chief executive, said the pharmacies disposal was an important step for the mutual.

"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," he said.

The need to drastically prune the Co-op's portfolio was triggered by a crisis at its banking arm, which had to be bailed out by hedge funds after the emergence of a 1.5bn capital deficit.

The row triggered the arrival and swift departure of Euan Sutherland as the group's chief executive amid a bitter power struggle with regional co-operatives and other stakeholders.

In May, members voted unanimously to approve a series of governance reforms proposed by Lord Myners, the former City minister.

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