- Thursday, April 25, 2024
A successful merger which would create a mega retail entity worth around £12 billion, is expected to ease EG’s debt burden
By: Chandrashekar Bhat
A MERGER of Asda and the UK business of petrol forecourts chain EG Group is likely to be completed by April end, a media report said.
A successful merger – which would create a mega retail entity worth around £12 billion – is expected to ease EG’s debt burden and help its owners negotiate its refinancing on more favourable terms.
Both Asda and EG Group are jointly owned by Blackburn’s billionaire Issa brothers – Mohsin and Zuber – as well as the London-based equity firm TDR Capital. Barclays and Rothschild are understood to be advising them on the potential merger.
Likely to be structured as a takeover of EG UK by Asda, the deal could add to the supermarket chain’s current debt of £4.7bn, according to a Times report.
The Issa brothers and TDR Capital acquired Asda from Walmart for an enterprise value of £6.8bn two years ago, bringing the Leeds-headquartered supermarket giant back under British control.
Reports on Tuesday also said the siblings were eyeing a takeover of Subway, the fast food chain.
A source told the Sun: “EG Group have felt for a while that Subway treated them the same way as other franchise partners and their massive growth hadn’t been appreciated. So what better way to show who’s boss than owning them.”
Mohsin and Zuber, who made a modest beginning to their entrepreneurial journey when they established EG Group with a single forecourt in Bury, have expanded their business quickly over the years.
Jointly ranked sixth in Eastern Eye’s Asian Rich List with a combined wealth of £6.5bn, the siblings also bought the Cooplands and Leon brands as they diversified their portfolio.
EG, which needs to refinance its £7 bn debt by 2025, announced earlier this month a $1.5 bn (£1.2bn) sale and leaseback deal on 415 stores in the US.
Zuber said in a statement at the time the management was committed to “further significant deleveraging”.
If Asda and EG UK are combined, the resulting entity will have 581 supermarkets, more than 100 convenience stores and 700 petrol forecourts.
