The Co-operative has announced the sale of its farming business to the Wellcome Trust in a deal worth £249 million.
In total, the Wellcome Trust has gained 39,553 acres of land containing 15 farms, 27 commercial properties and more than 100 residential properties from which a high rental income can be claimed.
Upon agreeing a deal, the Co-op confirmed that all existing farm management members and employees will transfer to the Wellcome Trust and was therefore confident that job losses will be minimal if, in fact, any occur at all.
According to executives at the Co-op, this sale will allow the group to focus on its core retail and consumer divisions, with food, insurance, legal and funeral services all expected to benefit as a result. The cash generated by the deal will be used to reduce debt built up by the group during the financial crisis and recession, with any remaining funds to be channelled into an investment programme for its core divisions.
Interim group chief executive at the Co-op, Richard Pennycook, believes that offloading its farming division will prove beneficial for the group in other areas.
He says; “The successful sale of our farms business is another important development for the Co-operative Group.
“The sale proceeds will enable us to further reduce our debt and progress with the delivery of the clear strategic plans we have in place for our core retail and consumer services divisions.”
This has been the second major deal completed by the Co-op in the past month, as only three weeks ago it managed to successfully close a deal relating to its pharmacy chain. The eventual buyer, the Bestway Group, acquired the business and its 774 outlets for a total of £620 million – with the proceeds from this deal again to be used to eat into the group’s debt pile.
The Wellcome Trust is one of the largest charities in the world currently backing research into ways animal and human health can be improved, and is the world’s second highest spending charitable foundation. It already holds a number of commercial properties along with a portion of the country’s agricultural land, but admits that this deal has been a “different scale of acquisition for us.”
Chief investment officer of the Wellcome Trust, Danny Truell, says; “We believe that we are ideally placed to develop and grow the Co-operative Group’s farms and farm business while providing continuity, and are delighted to have acquired them in what will be one of the largest global deals of its kind.”
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