Bestway has entered into an agreement to acquire The Co-operative Group’s 770-strong pharmacy chain for £620m.

The transaction is due to complete in October 2014, following a process to formally separate the Co-op’s pharmacy business from the rest of the group. As part of a transitional agreement, the Co-op Group will provide services to the pharmacy business for up to 18 months, while Bestway will have the right to operate under the Co-operative Pharmacy brand for 12 months.

The pharmacy division has been up for sale since a business review identified it as not being part of the Co-op Group’s core strategy. Proceeds of the sale will be used to reduce the group’s net debt and to allow new investment into its retail division, according to the official statement.

The Co-operative Pharmacy is the third largest pharmacy business in the UK, and the largest in Wales. It has over 770 branches across the UK and over 7,000 employees, with sales of £760 million and operating profit of £33 million in 2013. The purchase price of £620m is the enterprise value attributed to the business on a cash and debt free basis.

Bestway is the UK’s 18th largest privately-owned company and seventh largest family-owned business. With this acquisition, it will have an annual turnover of approximately £3.4 billion and a global workforce of more than 32,600 people, with over 11,900 people in the UK.

Bestway Group chief executive Zameer M. Choudrey said: “We are delighted to be bringing The Co-operative Pharmacy business into the Bestway family, adding to our growing and diverse business portfolio. In line with our own ethos, there is a strong focus on supporting and servicing the needs of the local communities within this business.

“The Co-operative Pharmacy is a strong, competitive business, operating in a sector where demographic trends show an increasing demand for healthcare services amongst the wider community. We see great potential to grow the business organically and through future acquisitions. We always look to take a long term approach and have a strong track record of successfully growing businesses that have previously been acquired within the group. We are confident that we will continue to do so with this business.”

Richard Pennycook, interim group chief executive of The Co-operative Group, added: “Bestway is acquiring an excellent pharmacy business characterised by the quality and professionalism of colleagues and high levels of customer service. Bestway in return is an ideal owner, being a strong family-run group with a proven track-record of putting the needs of customers first.”