• Sunday, July 21, 2024

Asda confirms buying petrol forecourts, takeaways in UK & Ireland from EG Group in £2.27b deal

The deal will facilitate Asda’s drive to pip Sainsbury’s to become Britain’s No.2 supermarket.

Representational Image (iStock)

By: Shubham Ghosh

British supermarket Asda has said it would purchase the bulk of petrol station operator EG Group’s UK and Ireland business to quicken its move into the convenience sector, setting up a company with combined revenue of around £30 billion.

Both Asda, which is Britain’s third-biggest grocer, and EG Group are owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital.

The unit of around 350 petrol stations and more than 1,000 food-to-go locations will be valued at £2.27 billion, a Reuters report said.

The deal will facilitate Asda’s drive to pip Sainsbury’s to become Britain’s No.2 supermarket as it rolls out its convenience format Asda Express across the EG petrol estate, the Reuters report added

“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,” Asda chairman Stuart Rose was quoted as saying.

He added that Asda would remain a “price leader” in sales of fuel.

The deal will get funding by £450 millions of equity from Asda’s shareholders that includes its former owner — US retail giant Walmart, £770 million of term-loan debt and around 1.1 billion from property-related transactions, including sale and leaseback of some of its stores, the Reuters report added.

According to EG, it would use the proceeds from the sale to help pay down debt, following a separate deal involving its U.S. operations earlier this year.

EG’s net debt was close to $9.7 billion at the end of 2022, which was more than seven times its adjusted earnings before interest, tax, depreciation and amortisation for the same year.

It said the group’s net leverage would fall to below five times, the Reuters report added.

The Issa brothers bought Asda two years ago and have already converted 166 EG sites to the “Asda on the Move” format.

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