The UK Competition and Markets Authority has conditionally approved Lloyds Pharmacy’s deal to acquire Sainsbury’s pharmacies.
A subsidiary of Celesio, Lloyds Pharmacy is required to sell pharmacy stores in 12 areas of England and Wales as part of its takeover.
Operating around 1,540 pharmacies in the UK, Lloyds Pharmacy agreed to acquire Sainsbury’s pharmacy business in a £125m deal last year. The deal will see the former acquire 281 pharmacies, including 277 in-store pharmacies and four located in hospitals.
All 277 stores are planned to be rebranded as Lloyds Pharmacy upon completion of the deal.
The new conditions come as the inquiry group of independent panel members found that the merger could lead to a substantial lessening of competition (SLC) at these 12 areas as the two companies' pharmacies are such close competitors.
CMA inquiry chair Simon Polito said: “Since pharmacies’ total revenue is largely dependent on the number of prescriptions issued, they have an incentive to attract additional customers, who we’ve found are prepared to switch between the two companies’ pharmacies, particularly when they are near to each other in a local area."
The pharmacies will be sold to a new owner with approval from the CMA in order to maintain the current level of competition for local customers.
Polito added: “By selling the Lloyds pharmacy in those areas to a new owner with the relevant expertise and the incentive to attract customers through its service quality, we can ensure that customers do not lose out from this deal.”
It is reported that the pharmacies to be sold are not permitted to be closed by Celesio.
Image: Lloyds Pharmacy has 1,540 pharmacies in the UK. Photo: courtesy of Celesio.