The owners of supermarket Asda and petrol stations company EG Group will announce a 10 billion-pound merger of their operations in Britain soon, state recent reports, a move which is expected to drive forward Asda’s shift into convenience stores.
The businesses are expected to formally announce a long-awaited tie-up in the next few days, which will create a combined business worth about £10bn.
Asda, Britain’s third-largest grocer, and EG are both owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital. Talks about a combination of Asda and EG UK were initially reported by The Sunday Times back in January.
Asda is expected to pay about £3bn for EG, supported by about £500m lent by the credit arm of US-based investment firm Apollo Global Management.
According to Sky News, the merged group will operate nearly 600 supermarkets, 700 petrol forecourts and 100 convenience stores and have revenue close to 30 billion pounds. It said the deal would accelerate Asda’s drive into the convenience store sector.
Since Asda was bought out by the billionaire Issa brothers and the private equity firm TDR Capital for almost £7bn in 2020, it is said to have undergone a series of cost-cutting moves including reducing premiums for delivery drivers and workers near London, closing pharmacies and changing night shifts.
The supermarket had already announced a plan to open 200 Asda On the Move convenience sites on EG petrol forecourts. The retailer is also acquiring 132 convenience stores from the Co-op.
The GMB union, which represents thousands of Asda workers, meanwhile has called on the government to block the merger, which had been anticipated, arguing it will be bad for consumers and workers.
Nadine Houghton, GMB organiser, said: “GMB believes this merger requires proper scrutiny from the CMA. We are concerned rising interest rates will leave the debt of the UK’s third largest retailer unsustainable.
“GMB’s priority is to protect and improve our members’ jobs and conditions and we believe this merger makes that harder.”
