Asda Acquiring EG Group’s UK and Ireland Business

    British supermarket chain, Asda Group is acquiring the convenience stores and petrol forecourts operating in the UK and Ireland from its sister concern, EG Group. The deal was announced on May 30 by the Issa brothers, owners of the aforementioned businesses and the private equity firm TDR Capital.  

    Under the agreement, Asda will take over roughly 350 petrol filling station (PFS) sites and 1,037 food-to-go outlets, meaning the new company will run around 700 petrol forecourts, 640 supermarkets, and 100 convenience stores. EG Group will retain about 30 PFS sites in England. 

    With the acquisition, Asda is aiming to become a new “retail champion” in the UK and to take on Sainsbury’s. With Asda Express, the group’s convenience format, it has become the second-largest supermarket across the EG petrol estate. The deal worth £2.3B (inclusive of debt) is expected to help the combined business generate a revenue of nearly £30B while acting as a step-change in accelerating Asda’s move into the convenience sector. 

    “Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen,” stated Stuart Rose, Chair of Asda. “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.”

    The supermarket has confirmed its investment of around £150M will integrate the combined businesses completely once the transaction is completed in the final three months of 2023. The overtaken EG locations are poised for rebranding—166 sites have already been branded as “Asda on the Move”.

    The returns from the deal are planned to help pay down and settle part of EG’s debt, as it grapples with the cost of servicing loans caused by multiple waves of interest rate hikes. EG has $9B of debt due to be repaid in 2025. With this acquisition, however, Asda will turn into a corporate behemoth with 170,000 staffers. According to the agreement, the EG employees working at the sites will transition over to Asda. 

    Despite declaring an overall cost reduction of £100M, according to Asda owners, the company won’t experience any massive employee layoff. However, this long-awaited tie-up was underscored as a “bad deal for workers” and was heavily criticized by the GMB, the recognised trade union in ASDA, with over 6000 members and growing.

    That said, mergers and acquisitions are highly complex transactions that involve a slew of tasks over a long span of time, often multiple years. For companies looking to make the most of their merger, acquisition, or capital-raising deals, leveraging expert M&A advisory services like Fission Consulting is a sensible business decision. Providing extensive technical, financial, marketing, and deal negotiation recommendations, a high-end M&A advisory service helps M&A clients successfully navigate their IT initiatives for merger, acquisition, or divestiture

    “Asda is committed to saving customers precious time and money across their shopping baskets and on the forecourt,” said Mohsin Issa, co-owner of Asda. “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.”

    Marking the transaction as “an important strategic step” for EG, Zuber Issa said, “Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued rollout of its successful convenience retail, fuel, and food service strategy.”

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