Asda, Britain’s third biggest supermarket group, said it has completed the acquisition of the majority of EG Group’s UK & Ireland business for an enterprise value of £2.07 billion.
EG Group, a petrol forecourt operator and retailer, and Asda are both owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital.
The deal, creating a group with combined revenue of nearly £28 billion, was announced in May, when the value was put at £2.27 billion. The revised price reflects adjustments agreed between the two parties.
Asda’s strategy is to boost its convenience store presence by rolling out Asda Express stores across EG’s 356 UK sites, part of a long-term plan to overtake Sainsbury’s and become the country’s second largest supermarket group.
Under the terms of the transaction, the company will also retain certain foodservice brands including Cooplands, its wholly-owned bakery business, as well as franchise businesses with the Starbucks, KFC, Sbarro, Chaiiwala and Cinnabon brands.
The group said it will also continue its strategy “to deploy emerging fuels and EV chargers, under its proprietary brand, evpoint, across the existing site network, as well as third-party locations”.
Asda, which is chaired by Stuart Rose, the former boss of Marks & Spencer, said the recruitment process for a permanent chief executive was ongoing.
EG Group said proceeds from the deal will be used to repay debt, reducing net leverage and enabling £2.64 billion of loans to be extended to February 2028. It plans to focus on international growth.
Gary Lindsay, managing partner at TDR Capital LLP, commented, “This transaction is all about growth – and bringing together the complementary strengths of Asda and EG UK. We are creating an enhanced and more diverse Asda business that delivers even greater value for its customers on a daily basis in stores and online.
“Becoming the number two UK supermarket again and delivering a stronger and more compelling proposition for UK consumers are the metrics we will judge the success of this transaction by.”
Co-CEO and co-founder of EG Group, Zuber Issa CBE, said, “The sale of the majority of EG Group’s UK business to Asda represents an important strategic step for the company, enabling EG to support the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience.
“This includes the ongoing investment and expansion of the EV charging business, evpoint, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.
“Following this transaction and the successful extension of the debt maturities to February 2028, EG Group will benefit from a sustainable capital structure from which to build for the future.
“I would like to thank all EG colleagues for their continued hard work and thank those who are transferring to Asda for their contribution to the success of EG and wish them well for the future. We look forward to executing our 2024 strategy with confidence.”
Chairman of the EG Group, Lord Stuart Rose, said, “The transaction is an important milestone for both companies.
“EG Group can focus on international growth underpinned by its strengthened balance sheet, whilst Asda can accelerate its convenience rollout on proven, well-invested sites.
“There is now a clear opportunity to grow and build the international business whilst ensuring EG plays a pivotal role in the energy transition.”