Lloyds Pharmacy must sell 12 stores as part of the company’s deal with Sainsbury’s, with 2,700 Sainsbury’s pharmacy staff members set to move to Lloyds as part of the £125 million agreement.

Celesio’s £125 million takeover of Sainsbury’s pharmacy business has been approved by the Competition and Markets Authority, on the condition that the company must sell 12 of its existing Lloyds Pharmacy stores.

The CMA carried out an inquiry after the announcement of the deal in July 2015 and found that there were many areas in England and Wales where the two companies’ pharmacies were in close enough competition that Lloyds Pharmacy would be dis-incentivised from attempting to attract new customers following the merger.

Chairman of the inquiry, Simon Polito, commented: In those areas where a Sainsbury’s pharmacy is currently a strong competitor, under common ownership Lloyds might be able to reduce service quality to increase profits without being concerned about losing customers to a rival.

The CMA has stated that one Lloyds Pharmacy must be sold in the following locations: Beaconsfield, Bracknell, Cardiff, Christchurch, Kempston, Kidlington, Leeds, Liverpool, Luton, Reading/Theale, Sandy and Warlingham. One area – Sutton Coldfield – was named in the CMA’s provisional report in April 2016, but has now been excluded.

German firm Celesio currently operates more than 1,500 UK pharmacies under the Lloyds Pharmacy brand and plans to acquire a further 277 pharmacies located in Sainsbury’s supermarkets and four in hopsitals, with around 2,700 members of staff expected to move to Lloydspharmacy stores from Sainsbury’s pharmacies as part of the deal.

Celesio says the merger will come into effect on 1 September 2016.

Celesio UK managing director Cormac Tobin said: Sainsbury’s is a leading UK retailer, which has created an attractive pharmacy business. As a specialist pharmacy operator we can build on this strong foundation to offer Sainsbury’s customers a more enhanced health offering.