Issa Brothers Mulling Merger Of Asda And EG Group

Namnews, 29th November 2021

The Issa brothers are reportedly considering merging newly-acquired Asda with their EG Group forecourt business.

The entrepreneurs and private equity partners TDR Capital have recently been reviewing options to break up their 6,000-strong global forecourt empire. However, Bloomberg News reported on Friday that a merger of their two businesses is being discussed to create a combined entity valued at around £26bn, including debt.

Other options being considered include offloading hundreds of petrol stations in Australia or listing the EG business.

The Issas and TDR Capital acquired Asda through a £6.8bn debt-fuelled deal at the end of 2020. Last month, it emerged that the supermarket chain would be lumbered with £500m more debt than previously anticipated after a £750m transaction to sell its own petrol stations to the EG Group collapsed.

Asda and EG Group have been working together more closely in recent months, unveiling plans to expand foodservice options at Asda sites and roll out ‘Asda On the Move’ convenience stores across EG forecourts.

Combining the two companies would create a sprawling retail operation with greater buying power.

The Bloomberg report stated that discussions were ongoing and there is no certainty they will lead to a transaction. EG Group and Asda have declined to comment.

Both firms are due to update the City on quarterly trading this week.

NAM Implications:

• A listing in the short or even medium-term i.e. going public unlikely (debt) unlikely…
• Australian petrol sites sale a probability to simplify holdings (and raise some cash)
• Suppliers should anticipate amalgamation, if only to optimise buying power…