The Co-operative Group has sold its 16,000ha farms business for £249m to the Wellcome Trust. The business trades as Farmcare and in 2013 had a turnover of £59.1m and operating profit in the region of £7m.
All of Farmcare’s 250 management and employees will transfer with immediate effect.
The business has been sold as a going concern, which was important to preserve the tenancy and contract farming activities which covered about 60% of the farmed acreage when news of the planned sale was leaked in February.
The sale includes 15,997ha (39,533 acres) of freehold and third party owned land, 15 farms, three packhouses, more than 100 residential properties and 27 commercial properties.
Of this, 7,166ha (17,708 acres) is freehold owned and is valued in the sale at £25,945/ha (£10,500/acre), or £186m.
The Co-operative has retained about 121ha (300 acres), which it said were not linked to the core farming business.
The sale proceeds would be used to repay debt and invest in the core business, said The Co-operative, which is to concentrate on its food, funerals, general insurance and legal services interests.
The Co-operative Group
- UK’s largest mutual business, owned by more than eight million members
- Operates 4,500 outlets, with around 87,000 employees
- Annual turnover of £11bn
- Started farming in 1896 and was Britain’s biggest farmer
- Farming interests of 15,997ha (39,533 acres) across 15 farms and three packhouses
- Farms mainly cereals and oilseeds, potatoes, sugar beet, top and soft fruit
Savills advised The Co-operative on the sale of the business while Bidwells acted for the buyer.
“The Co-operative is pleased to have found a buyer that will continue to invest in and develop the farms business, while maintaining existing services for local communities, such as the pioneering educational programme for children – Farm to Fork,” said a statement.
The Wellcome Trust is the world’s second highest-spending charitable foundation, driving improvements in human and animal health. It spends more than £700m a year supporting biomedical research, the humanities and the social sciences and has agricultural investments at Hinxton in Cambridgeshire, Kings Langley in Hertfordshire, and Alpraham in Cheshire.
See the map for the farm locations – click on the pins to see the farm details.
The trust was established in 1936 in the will of Sir Henry Wellcome, a pharmaceutical pioneer, industrialist, philanthropist and archaeologist. Since 1985 it has given away more than £11bn in pursuit of its charitable objectives.
“In the Wellcome Trust we have a buyer whose values are closely aligned to those of The Co-operative,” said Richard Pennycook, interim group chief executive of The Co-operative Group.
“The Wellcome Trust has a strong track record as a long-term investor which values responsible stewardship over quick profits, with extensive and successful interests in UK property and farmland,” said Danny Truell, chief investment officer of the trust.
“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.
“The trust’s philosophy is to provide long-term investment for the businesses and property we hold in good times and in bad. We will take this approach to running Farmcare Trading Ltd as a going concern, giving a business that is already strong and successful the support and resources it needs to grow, to the benefit of employees, tenants, partners and local communities. Over the last 20 years, we have become one of the largest landlords in the UK as part of owning a globally diversified portfolio. We seek to be one of the most responsible.”
The sale is to Gower Place Investments Limited, a wholly owned subsidiary of the Wellcome Trust. The Co-operative Group also recently agreed to sell its Pharmacy business for £620m to privately owned Bestway Group; this deal is due to complete in October.