Blackburn-based retailer EG Group has offered up 27 of its petrol station forecourts across the country as part of its takeover of the supermarket giant, to quell any residual worries the Competition & Markets Authority has about the deal.
The Government’s capital markets regulator is investigating EG’s proposed acquisition of a majority stake in Asda Group in a consortium with private equity firm TDR Capital – a £6.8bn deal agreed last October but still awaiting regulatory approval.
EG, whose subsidiary Euro Garages has more than 5,200 petrol stations across the UK and Europe, is owned by billionaire brothers Zuber and Mohsin Issa, who also also own a substantial regional property portfolio through investment vehicles such as Monte Blackburn, which is developing the Frontier Park logistics scheme in Lancashire.
The CMA issued a statement in April stating that its Phase 1 investigation into the proposed Asda takeover had concluded that the deal raised local competition concerns in relation to petrol supply and prices in 36 locations across the UK. It added that the deal would be subject to a phase two investigation “unless the parties offer acceptable undertakings to address these competition concerns”.
A fresh statement from the regulator yesterday said the Issas and TDR had jointly offered undertakings to the CMA – involving the divestment of 27 EG Group petrol filling stations – and that there were “reasonable grounds” to believe the CMA might accept the offer.
Following the announcement, the Issas and TDR said: “Over the course of the past 10 days, we have been working constructively with the CMA to offer remedies to address the CMA’s competition concerns. Today, we are pleased to confirm that the CMA has indicated it has reasonable grounds to believe the proposed remedies are acceptable, enabling us to arrive at a conclusive outcome for the acquisition of Asda in Phase 1 [of the CMA’s inquiry].”
The added: “As is usual in cases such as these, the CMA now has a period of 40 days to work through the detail of the proposed divestitures and therefore we are restricted in the level of information we are able to provide on specific sites.
“However, we have been comforted by the significant interest we have already received from potential buyers during this process, demonstrating the strong growth potential of our forecourts and the liquidity in the market.
“Over the coming months, we are confident that we will be able to agree a sale to suitable operators to take over all identified sites, and we will share more information in due course.”
Under the proposed takeover, EG and TFG would acquire Asda’s UK forecourts business, including petrol filling stations, car washes and ancillary land. Asda is currently a wholly owned UK business of US-based Walmart.
The forecourts would remain an integral part of the broader retail locations where they are situated, continue to be Asda-branded and will remain a “price leader in the fuel market”, the parties said while announcing the deal last year.
In April, EG acquired healthy eating fast food chain Leon in a deal reported to be worth £100m, and announced plans to open 20 new locations a year from 2022.