"We are looking forward to working constructively"
The billionaire Issa brothers’ takeover of Asda is now being investigated by competition regulators.
Mohsin and Zuber’s EG Group and private equity partners TDR Capital bought the supermarket chain from US owners Walmart in October 2020 in what was a £6.8 billion deal.
Now, the UK’s Competition and Markets Authority (CMA) has formally launched its phase one probe into the Asda deal after the European Commission referred the deal to it.
The Issa brothers said that the move was “expected”.
The Local Democracy Reporting Service said that the CMA will now look at whether the acquisition will lead to a “substantial lessening of competition”, particularly in the petrol forecourt market.
The brothers and TDR formed a takeover vehicle called Bellis Acquisition Company for the deal.
They are believed to have requested the European Commission referred the deal to the CMA for review.
A spokesperson for the Issa brothers and TDR Capital said:
“As we expected, the CMA have launched a phase one investigation into the acquisition of Asda following a referral from the European Commission.
“We are looking forward to working constructively with the CMA to address any questions they may have.”
The regulator now has until February 18, 2021, to reach a decision on the first stage of its investigation and whether to mount a lengthy probe.
A December 22 deadline has been set for interested parties to comment.
The deal is not expected to encounter the same fate as the failed attempt by Sainsbury’s to buy out Asda, which was blocked by the CMA in 2019.
However, it is thought the regulator may demand the Issa brothers offload some of their EG Group petrol forecourt sites, after having cited reduced competition in fuel retailing among its concerns when it vetoed the Sainsbury’s tie-up.
Analysts expect the CMA to require the disposal a handful of sites, estimated at between 10 and 15.
The brothers have committed to keeping Asda’s headquarters in Leeds and stated they would invest to grow its convenience and online operations.
The brothers’ Blackburn-based EG Group has almost 6,000 petrol stations across the UK and Europe, employing around 44,000 staff.
EG Group already runs convenience stores for Spar and French hypermarket chain Carrefour.
It has also attracted customers by bringing major food-to-go brands on to its sites including 110 Starbucks outlets and the largest franchise of KFC stores in the UK, with 125 sites.