More

    Union warns against potential Asda-EG Group ‘debt’ merger

    General view of the petrol and diesel prices at an Asda filling station on April 21, 2020 in Milton Keynes, United Kingdom. (Photo by Catherine Ivill/Getty Images)

    GMB Union has warned that a ‘debt-laden’ merger between Asda and petrol forecourt business EG Group will threaten the UK’s food supply, fuel prices and 100,000 jobs.

    In a letter to Business and Trade Secretary Kemi Badenoch, the union pointed out that Asda’s debts are already thought to be more than £4.7 billion and any potential merger with EG Group could add more than £7bn to the total.

    The £7bn EG debt is due to be refinanced in 2025 when interest rates are likely to be significantly higher – placing the ‘big four’ supermarket in a perilous financial position, the union warned.

    Both retail groups are owned by brothers Zuber Issa and Mohsin Issa, along with private equity firm TDR Capital.

    According to reports earlier this year, the Issas, founders of EG Group who acquired Asda from Walmart in 2020, are considering the merger of both businesses in a mega deal that would create a retail giant worth around £11-£13bn.

    GMB has called on the business secretary to ensure the merger is fully investigated by the Competition and Markets Authority (CMA).

    The letter arrived as the government this week published its legislation, the Digital Markets Bill, on strengthening the investigatory and enforcement powers of the regulator.

    “The potential Asda and EG Group merger is likely to saddle the company with a massive, unsustainable debt burden. Allowing it to go ahead would be deeply irresponsible,” Nadine Houghton, GMB National Officer, said

    “Firstly, it risks the jobs of more than 100,000 employees. As one of the largest private sector employers in the UK, the future sustainability of the business is a matter of national, public interest.

    “Secondly, it would place the future of the UK’s food supply at risk by loading even greater debt on to one of the UK’s Big four Supermarkets. Finally, it will have a chilling effect on competition for fuel prices by creating a ‘super retailer’ of more than 700 petrol stations.”

    The Issa brothers and TDR Capital have earlier announced that they will sell Asda’s petrol forecourts business to EG Group after the completion of the Asda acquisition. However, EG Group has later called off the acquisition citing “several changes to the financial evaluation of the proposed transaction” following the sharing of commercial information which was only allowed after June 16, 2021, when the restrictions imposed under the Competition Law were lifted.

    On that day, the CMA has accepted undertakings to divest EG Group’s 27 sites to proceed with the acquisition of the supermarket chain by the Issas and TDR Capital.

    The regulator has earlier ruled that the Asda takeover by the owners of EG Group could lead to higher petrol prices in some parts of the country, following its initial investigation into the £6.8 billion deal.

    At the same time, commercial initiatives between EG and Asda have since flourished, particularly the roll-out the Asda On the Move proposition across EG’s UK forecourts. Asda this week opened its 150th On the Move store, with plans to roll out 200 of the roadside convenience store formats by the end of of this year.

    Latest

    Post Office Horizon inquiry: Lawyer advised to adopt ‘cold’ approach, not apologise

    A Post Office lawyer suggested branding wrongfully convicted sub-postmasters...

    ‘Scottish fans more likely to stockpile for Euro 2024 than England fans’

    Scottish fans are more likely than those in England...

    Revenues soar for top Indian-owned companies in the UK 

    As negotiations around a UK-India Free Trade Agreement pause...

    KP Snacks’ ranging trials increase category sales by 15% on average

    KP Snacks today reveals the success of recent ranging...

    Don't miss

    Post Office Horizon inquiry: Lawyer advised to adopt ‘cold’ approach, not apologise

    A Post Office lawyer suggested branding wrongfully convicted sub-postmasters...

    ‘Scottish fans more likely to stockpile for Euro 2024 than England fans’

    Scottish fans are more likely than those in England...

    Revenues soar for top Indian-owned companies in the UK 

    As negotiations around a UK-India Free Trade Agreement pause...

    KP Snacks’ ranging trials increase category sales by 15% on average

    KP Snacks today reveals the success of recent ranging...

    Cadbury announces Top Deck relaunch in 200th anniversary celebrations

    Cadbury has announced that it will be re-launching Cadbury...

    Post Office Horizon inquiry: Lawyer advised to adopt ‘cold’ approach, not apologise

    A Post Office lawyer suggested branding wrongfully convicted sub-postmasters as “liars” and “criminals” to attack their credibility, the inquiry heard over the week. In...

    ‘Scottish fans more likely to stockpile for Euro 2024 than England fans’

    Scottish fans are more likely than those in England to be stockpiling their fridges and cupboards ahead of Euro 2024, a recent survey has...

    Exonerations for wrongly convicted Scottish sub-postmasters as new law comes into force

    Scottish sub-postmasters who were wrongly convicted as a result of the Post Office Horizon scandal will be automatically exonerated today (14). The Post Office (Horizon System)...