Asda is to acquire EG Group’s UK and Ireland operations for an enterprise value of £2.27bn to accelerate its growth strategy in convenience, omni-channel retail and foodservice.
The Big 4 grocer will obtain 350 petrol filling station sites and over 1,000 food-to-go locations.
The acquisition looks to allow Asda to better serve a combined base of around 21 million customers each week, as it remains committed to offering the lowest supermarket fuel prices.
Following completion of the transaction, which is expected to close in the fourth quarter of 2023, Asda plans to invest more than £150m within the next three years to fully integrate the combined business.
Shareholders are providing £450m of additional equity to fund the deal.
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This will also strengthen Asda’s financial profile with the contribution of £195m EBITDA after rents and expects to realise over £100m of working capital benefits as a result of its enlarged scale.
As a result of the deal, the group will have combined revenues of nearly £30bn.
“Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen. Throughout my career in retail – one thing has always been true, that meeting the evolving needs of customers is the route to growth,” Asda chair, Stuart Rose said.
“This transaction is all about driving growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business.”
Asda co-owner Mohin Issa added: “The combination of Asda and EG UK&I will be positive news for motorists, as we will be able to bring Asda’s highly competitive fuel offer to even more customers.
“I would like to sincerely thank all colleagues at both businesses for their ongoing efforts to serve our customers during tough economic times, and I look forward to welcoming our new colleagues from EG UK & I and expanding the Asda family further.”
Issa will continue to lead the business, while Asda commences a search to appoint a new group CEO.
