Donald Munro has sold the eponymous pharmacy chain that was Scotland's biggest independent in a move that sources said likely netted the controlling family more than £20m.
Donald Munro has sold the eponymous pharmacy chain that was Scotland's biggest independent in a move that sources said likely netted the controlling family more than £20m.
The veteran pharmacist has sold the retail chemist to German-owned Lloyds Pharmacy in what appears to have been a well-timed disposal, which a source said would be followed by the sale of the Munro wholesale operations.
As the sale was completed earlier this month shareholders will probably escape the effect of controversial changes in the Capital Gains Tax regime which will take effect in April. The scrapping of the taper relief system could result in the tax rate payable by some vendors jumping from 10% to 18%.
Aged 71, Munro may have been ready for retirement following a 48-year spell in charge of the business. After opening his first store in May 1959, in Glasgow, Munro expanded through acquisitions and organic growth to include more than 25 outlets. These are centred in west Scotland but the group has branches stretching from Edinburgh to Aberdeen.
However, the timing of the sale indicates that Munro may have been persuaded to bring forward plans to sell the business when the Chancellor of the Exchequer announced plans to reform the CGT regime in his pre-Budget report in October.
Last April, East-Kilbride headquartered Munro appeared to signal its intent to remain a significant independent force by acquiring 13 stores in Scotland from giant rival Alliance Boots.
The firm also bought two stores in northern Scotland from independents.
Announcing those deals, managing director John Cochrane said then that the purchases formed part of a £20m drive to expand from 29 to 50 stores. Cochrane was recruited as a director along with management consultant Anthony Baxter in 2006 to help lead an expansion drive.
Asked yesterday why the retail business had been sold, he said: "There has been a huge amount of unprecedented change in the industry."
The latest abbreviated accounts filed by Munro Pharmacy Limited, one of a number of retail pharmacy businesses owned by the Munro family, indicate that it was very profitable.
In the year ended September 30, 2006, the firm made gross profits of £5,123,000, up from £4,965,724 in the preceding period. This ran from September 8, 2004, to September 30, 2005.
The company made pre-tax profits of £1,929,195, compared with £1,989,189 in the previous period.
A sector watcher said Lloyds Pharmacy, owned by Germany's Celesio, would look to boost returns by stripping out central costs.
With 1600 pharmacies across the UK, Lloyds has huge buying power.
Details of the transaction were not disclosed.
On its website, Munro Group confirmed the entire share capital of firms in its retail division had been sold to the holding company of Lloyds Pharmacy but that ownership of its pharmaceutical wholesaling business had not changed.
A source said the wholesaling business, which is targeting turnover of £150m, was being sold to a trade rival, Phoenix Healthcare Distribution. Cochrane declined to comment.
Some observers expect a flurry of company sales ahead of the CGT changes. Others believe the changes will encourage those who were already intending to sell to get a move on without sparking a rush for the exits.
