Asda's owners Issa brothers are considering merging the supermarket chain with EG Group, their UK petrol forecourts business, in a mega deal that would create a retail giant worth between £11billion-£13billion, stated a recent report.
According a report The Sunday Times, a possible merger was being considered as part of refinancing at EG Group, which has £7 billion of debt falling due in 2025.
Both Asda and EG are jointly owned by the brothers Mohsin and Zuber Issa and London-based private equity firm TDR Capital. A merger of both profitable firms should allow any refinancing of debt to be better terms.
Lord Stuart Rose, the current chairman of Asda and EG, would likely chair the combined entity, stated The Sunday Times, adding that bankers at Barclays and Rothschild are “understood” to be advising the brothers and TDR on the potential deal.
If the merger goes ahead it would create a group with 581 supermarkets, 700 petrol forecourts and more than 100 convenience stores in the UK.
Talks over merging the two businesses come ahead of a refinancing of EG Group, which has 7 billion pounds of debt due in 2025, according to the report.
The news comes after it was reported earlier that the Issa brothers are also considering a £1bn sale of part of their US petrol station empire and has hired investment bankers at Eastdil to lead the process.
Last week, the country's competition regulator said it has begun investigating British supermarket group Asda Stores' purchase of Co-Operative Group's petrol forecourt estate.
The Competition and Markets Authority (CMA) said it had until March 14 to make its phase 1 decision on whether the deal will reduce competition in the UK.
Asda is planning to open 300 convenience stores by the end of 2026, aiming to become a player in the smaller shop market to help drive growth, and creating thousands of new jobs in the process.
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