Asda owners the Issa brothers are considering a merger between the supermarket giant and their UK petrol forecourts business, in a deal that would value the business at £12 billion.
Talks are being held before a crunch refinancing at the brothers’ EG Group, which has £7 billion of debt falling due in 2025, The Times reported.
A successful deal would mean the business would have more than 581 supermarkets, 700 petrol forecourts and 100 convenience stores in the UK.
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The Issa brothers and TDR Capital bought Asda two years ago in a £6.8 billion leveraged buyout – this merger is just one option that Mohsin and Zuber Issa are considering to cut debt in the face of surging interest rates.
Bankers at Barclays and Rothschild are reportedly advising the brothers and TDR Capital on any potential deal, which could cost between £11 billion and £13 billion. In any merger, Lord Stuart Rose would likely chair the combined group.
However, the merger is likely to face scrutiny from the Competition and Markets Authority (CMA) and perhaps even government intervention to protect petrol prices in the face of the ongoing cost-of-living crisis.
The grocer has been working with the Issa brothers EG Group to rollout investment in the convenience market, like selling Asda products at petrol station forecourts.
Asda has also refreshed its Just Essentials value range, specifically designed to provide customers with everything they need as it steps up its commitment to supporting families amid the current economic crisis.
