Issa Brothers considering £13b Asda & EG Group Merger

The billionaire Issa brothers are exploring a £13 billion merger between Asda and the EG Group.

Mohsin and Zuber Issa acquired the supermarket giant in 2021 for £6.8 billion alongside private equity firm TDR Capital.

According to reports, merger talks are being held ahead of refinancing at EG Group, which has £7 billion of debt due in 2025.

The Times reported that the brothers and TDR Capital hope that by combining both profitable businesses they will be able to refinance the debt on far more favourable terms.

This comes after it was revealed that the Issa brothers are also thinking about a £1 billion sale of part of their American petrol station empire.

EG Group has hired investment bankers at Eastdil to lead the process.

EG Group is jointly owned by the Issa brothers and TDR Capital, the private equity firm they partnered with to acquire Asda in 2021.

The group, whose brands include Euro Garages, Coopland and Leon, has over 6,600 sites across the world.

In 2001, the brothers started out with a single petrol station in Bury, Greater Manchester.

They are worth a combined £4.73 billion.

In response to the proposed merger, GMB national officer Nadine Houghton said:

“This proposed merger raises the spectre of a private equity black hole on the UK high street.

“More and more of our essential household goods – from food to fuel – are controlled by unaccountable private equity backers.

“This merger isn’t in the interests of the 200,000 impacted workers, or the UK economy, or even consumes.

“It simply suits the debt refinancing arrangements of a private equity firm and their business partners.”

“GMB stands on the side of hard-working families in calling for the role of the CMA to be expanded – giving greater regulatory oversight in relation to private equity buyouts and ensuring greater protection of both consumers and workers.”

In its most recent trading update, for the three months to September 30, 2022, EG Group’s total revenue increased to £8 billion from the £7.1 billion during the same period in 2021.

The group’s EBITDA also increased from £345 million to £352 million, with fuel gross profits rising from £412 million to £479 million and food service gross profit going from £137 million to £144 million.

Grocery and merchandise gross profit fell from £298 million to £294 million over the same period.

As of September 2022, EG Group’s net debt stood at £7 billion.

The group employs more than 50,000 people working in over 6,600 sites across the UK and Ireland, Europe, USA and Australia.