Asda portfolio to grow after Issa brothers’ takeover
The Blackburn-based billionaires acquired the supermarket giant in a £6.8bn deal on Friday and intend to expand its portfolio of sites across the country as they work to reposition the business.
Zuber and Mohsin Issa own EG Group, whose subsidiary Euro Garages has more than 5,200 petrol stations across the UK and Europe. They also own a substantial regional property portfolio through investment vehicles such as Monte Blackburn, which is developing the Frontier Park logistics scheme off Junction 6 of the M65 in Lancashire.
The brothers agreed to acquire a majority stake in Asda – a wholly owned UK business of US-based Walmart – in a consortium with private equity firm TDR Capital on a debt-free and cash-free basis. The deal is subject to regulatory approvals and expected to complete in the first half of next year.
Under the new ownership structure, the Issa brothers and TDR Capital become majority owners and Walmart will retain an equity investment in the business, with an ongoing commercial relationship and a seat on the board.
The new owners will continue to build the business “at a time of evolution in the UK food retail sector, and benefitting from fresh capital and expertise”, according to a statement issued on behalf of the consortium.
“The brother’s experience and expertise, particularly in convenience retailing and strategic brand partnerships, means they are uniquely placed to help Asda explore new opportunities for growth.”
In particular, EG Group’s portfolio of 6,000 petrol stations across the UK and Europe is expected to provide Asda with fresh opportunities for expansion through retail partnerships, the statement added.
Mohsin and Zuber Issa said: “We believe that our experience with EG Group, including our expertise around convenience retail and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy.”
Asda, which has more than 100 stores across the North West, will remain headquartered in Leeds, where it was founded, and continue to be led by chief executive Roger Burnley, who will serve on Asda’s new board alongside representatives appointed by TDR Capital, the Issa brothers and Walmart.
Included in the new owners’ strategy is the investment of more than £1bn in the business over the next three years, to “further strengthen the business and its supply chain”.
The Issa brothers continued: “We are very proud to be investing in Asda, an iconic British business we have admired for many years.
“Asda’s performance through the Covid-19 pandemic has demonstrated the fundamental strength and resilience of the business, and we and are excited to support Roger and his team as they continue to reposition the business to drive long-term growth.”
Walmart bought Asda in 1999 for £6.7bn. The Arkansas-headquartered retailer has said it expects to report a £1.9bn loss for its next financial year as a result of the reduction of its stake in Asda.
The Sunday Times values the Issa brothers’ fortune at £3.5bn.