Co-operative Group sells crematoria for £43m
FIVE crematoria operated by the Co-operative Group have been sold for £43m to Dignity, the UK’s only listed funeral services business.
The Co-op will spend the money on improving its funeral homes business.
It has signed a conditional sale and purchase agreement to acquire the facilities currently run by Funeral Services (trading as Co-op Funeralcare). The deal will be settled in cash upon completion.
The crematoria are situated in areas not currently served by Dignity. Of the facilities acquired, three are freehold and based in Glasgow, Sheffield and Lichfield, with the other two leased from and managed on behalf of local authorities in Shropshire and Stockport.
Richard Lancaster, the managing director of Co-op Funeralcare, said: “This agreement is key in allowing us to further invest in providing essential funeral services to our members and customers in communities across the UK as we have done for over 100 years.”
The sale proceeds will be reinvested in the Co-op’s funeral parlours, to fund the rollout of new products and services.
The deal forms part of a £1.3bn investment over three years to breathe fresh life into the 172-year-old mutual. There are plans to refurbish the funeral homes and supermarkets and to install new systems in its insurance business, as well as improving products and services.
Dignity said the deal for the freehold locations was conditional upon the transfer of trade and assets of the relevant locations to a new entity, which is expected to complete on or around July 5, 2016.
Acquisition of the leasehold locations is conditional upon consent of the relevant councils, together with the transfer of the trade and assets of the location to a new entity. Consequently, one leasehold location is anticipated to complete on or around July 25, with the other following a week later.
The acquisitions are being funded from Dignity’s own cash resources.
The locations being acquired generated earnings before deducting interest, taxation, depreciation and amortisation of £2.9m for the year ended January 3, 2016. The unaudited gross assets of the locations being acquired as of the same date was approximately £10.9m.
Mike McCollum, chief executive of Dignity, said: “This acquisition will allow us to extend our crematoria network into new geographical areas. It represents a good investment for Dignity, using cash already held by the group, and supports our continued growth.”
Dignity currently operates 39 crematoria throughout the UK. Since flotation, the group has successfully acquired and integrated several other crematoria locations.
