Asda owners to reveal £10bn merger with petrol stations giant
Asda’s owners and petrol stations business EG Group are understood to be about to reveal a £10bn merger of their UK operations.
Sky News reports that the billionaire Issa brothers – Mohsin and Zuber, who set up Blackburn-based EG Group – and TDR Capital intend to unveil the deal today – 26 May.
The union of Leeds-headquartered Asda and EG UK will create a group with 170,000 employees and revenues of nearly £30bn.
The combined group will run nearly 600 supermarkets, 700 petrol forecourts and 100 convenience stores.
It will represent the biggest deal in financial terms in the career of Lord Rose of Monewden, the former Marks & Spencer and Ocado Group chairman who now chairs both Asda and EG. The deal will also accelerate Asda’s advance into the convenience store sector.
Discussions about a merger of Asda and EG UK have been in progress for more than six months, and were initially reported in the media in January.
About £7bn of EG’s debt is due to be repaid in 2025, while the combined group will own commercial real estate assets valued at more than £9bn.
The merger will be structured as an acquisition of EG UK by Asda and will cost around £1.25bn.
GMB, the union for Asda workers, has responded to the merger news by calling for a referral to competition authorities.
Nadine Houghton, GMB National Officer, 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.
“More than 7,000 ASDA colleagues are already facing hire and rehire – this slashing of terms and conditions is just the tip of the iceberg.
“GMB’s priority is to protect and improve our members jobs and conditions and we believe this merger makes that harder.”