Asda buys petrol empire from its owners for £2.3 billion
30 May 2023, 08:04
The supermarket’s co-owner Mohsin Issa, also EG Group co-founder, said the deal will let him offer ‘Asda’s highly competitive fuel’ to more people.
Asda has bought its sister business EG Group’s UK and Irish operations for £2.27 billion, it said on Tuesday, bringing another 350 petrol stations into its portfolio.
The supermarket’s co-owner Mohsin Issa, who also co-founded EG Group, said the deal will let him offer “Asda’s highly competitive fuel” to even more customers.
The companies hope to make synergy savings of around £100 million from the deal over the next three years, largely through the combined group’s size.
It did not announce any job cuts but did not rule them out.
The deal puts an end to months of speculation about the future of the two firms, both owned by the billionaire Issa brothers.
The combined company is expected to be worth around £10 billion, have revenues of around £30 billion and employ in the region of 170,000 people.
The deal is also a way for EG Group to help pay down its debts.
The £2.3 billion it gets from Asda from the sale will be combined with the 1.4 billion dollars (£1.1 billion) it gained from a deal in the US.
Taken together, these payments will help reduce EG’s reported £7 billion debt pile.
Its net leverage will fall, meaning the amount of debt it has will be less than five times higher than its earnings before interest, tax, depreciation and amortisation (Ebitda).
But the GMB union has previously said the deal risks lumping part of that debt on to Asda, which already owes around £4.7 billion.
There had been speculation of a tie-up between Asda and the EG Group since just after the Issa Brothers bought the supermarket chain for £6.8 billion in 2020.
They swooped on Asda after former owner Walmart’s plan to sell it to Sainsbury’s was blocked.
Stuart Rose, who chairs Asda and EG Group, said: “Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen.
“Throughout my career in retail one thing has always been true – that meeting the evolving needs of customers is the route to growth.
“This transaction is all about driving growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business.”
Mohsin Issa said: “Asda is committed to saving customers precious time and money across their shopping baskets and on the forecourt.
“The combination of Asda and EG UK&I will be positive news for motorists as we will be able to bring Asda’s highly competitive fuel offer to even more customers.”
