The complex road to Co-Op’s farm sale

A range of advisors helped with the valuation and recent £249 million ($420 million; €314 million) sale of The Co-Operative’s farms business, FarmCare, to UK health charity The Wellcome Trust, according to Richard Quinn, managing director of FarmCare.

The valuation process was particularly complex because it had to take into account various businesses as well as the land; it included 100 residential properties and 27 commercial properties. The land was also farming a variety of different production crops and livestock too, adding to the complexity, said Quinn.

“It was certainly not a straightforward calculation, but I think the valuation Wellcome Trust acquired it at was appropriate,” Quinn told Agri Investor.

UK estate agency Savills counseled Co-Op on farmland values whereas accountancy firm Deloitte advised on valuing the overall business. UK property consultants Bidwells and accountancy PricewaterhouseCoopers performed the same respective tasks for Wellcome, according to Quinn.

Despite the deal’s complexity, Co-Op’s sale attracted a huge amount of interest from a wide range of investors including wealthy individuals and existing agribusinesses, according to Quinn. The firm did consider selling off parts of the business to different parties although always preferred to sell the business as a whole, he added.

“I am sure there will be many people saying that you could get more money for selling the farms off separately but FarmCare is an integrated business, so there would have been a large amount of complexity splitting it up. Plus, it was in the interests of Co-Op to sell as a whole and finding the right investor was of upmost importance.”

While the bid price was of course an important factor, FarmCare and Co-Op officials were also interested in investors with the longest term interests and those that would invest further to develop the business.

While in many cases it is now business as usual for FarmCare, there are clear opportunities for further investment and development, said Quinn.

“We will be working hard to develop the business, improve performance and be a leading agribusiness,” he said.

Before the sale, FarmCare had already started working on developing new offtake arrangements with other supermarkets and food businesses, said Quinn adding that that process might be easier now.