EMBATTLED mutual Co-operative Group has ended more than a century of crop-growing tradition by agreeing to sell its farms business for £249 million.
The disposal, to the health-focused Wellcome Trust charitable foundation, comes just weeks after the group struck a £620m deal to offload its pharmacies stores as it seeks to recover from the downfall of its banking arm.
Under yesterday’s deal, Wellcome Trust is buying 39,533 acres of land, 15 farms, more than 100 residential properties and 27 commercial properties.
The sale includes six farms in Scotland – spanning Aberdeenshire, Angus, Ayrshire, the Borders and Perthshire – employing a total of 85 workers.
Co-op’s interim chief executive, Richard Pennycook, said he was pleased to have found a buyer that will continue to invest and develop the farms business, which dates back to 1896.
The sites grow a variety of cereals, including wheat for bread flour, and a number of fruit and vegetables, such as potatoes, cider apples and peas. However, the enterprise was not considered a core business to the Co-op as it supplies only a small proportion of the food sold in the firm’s network of more than 2,800 stores.
Pennycook, the former finance director of supermarket chain Morrisons, took charge of Co-op when Scots-born chief executive Euan Sutherland resigned in March following a row over the leaking of his pay details.
Yesterday’s deal came as the group seeks to focus on its core retail, funeral and general insurance services after last year’s discovery of a £1.5 billion shortfall in its banking arm’s finances.
Pennycook said: “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.”
Wellcome Trust spends about £700m a year on its charitable activities, including medical research and education. The organisation has pledged to maintain Co-op’s existing services for local communities, such as its “Farm to Fork” educational programme for children. Chief investment officer Danny Truell said: “The trust’s philosophy is to provide long-term investment for the businesses and property we hold in good times and in bad.
“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.”