Asda completes £2bn buy of EG Group’s UK business

Leeds-based supermarket giant Asda announced it has completed the acquisition of EG Group’s UK business for an enterprise value of £2.07 billion.

“Buying the EG UK business is key to Asda’s strategic plan to create a value-led convenience offer by rolling out Asda Express across EG UK’s 356 predominantly freehold sites – which include modern convenience stores on petrol filling stations (PFS), and benefit from high footfall and traffic flow,” said Asda.

“This transaction builds on Asda’s acquisition of 119 convenience sites with attached PFS from the Co-op Group, which started to convert to the Asda Express fascia earlier this month, and the successful launch of three stand-alone Asda Express convenience sites since October 2022.

“The EG and Co-op acquisitions, plus the three Asda Express stores currently open, give Asda 478 convenience stores today, with a commitment to opening a further 300 stand-alone convenience stores by the end of 2026.

“This is in addition to its existing estate of 580 supermarkets and 31 Asda Living stores, as well as 321 PFS sites.”

Blackburn-based billionaire brothers Mohsin and Zuber Issa and private equity firm TDR Capital completed the £6.8 billion acquisition of a majority ownership stake in Asda from Walmart Inc. in 2021.

Walmart retains an equity investment in Asda, with an ongoing commercial relationship and a seat on the board.

Mohsin Issa, co-owner of Asda said: “This is a great day for Asda and for millions of UK consumers. Asda is a much-loved brand that is instantly recognised for great value.

“I could not be more proud or excited that the iconic Asda sign is now coming to hundreds more communities.”

Asda chair Stuart Rose said: “As families continue to face into cost-of-living challenges, bringing Asda’s long-standing value in groceries and fuel to even more communities is a win for UK consumers.

“Asda has shown through its actions over the last 18 months that it is firmly on the side of consumers – whether that’s through its Just Essentials range, Kids Eat for £1 or Asda Rewards – which has put over £200m back in the pockets of shoppers through their Cashpot.

“This commitment is backed up by the fact it has held the title of the lowest-priced traditional supermarket for 26 years in a row.

“The combination of Asda and EG UK will only create more opportunities for Asda to bring that focus on value to even more communities – as well as driving the sustainable growth of the business through a convenience offer of genuine scale and substance.”

Gary Lindsay, Managing Partner at TDR Capital LLP, said: “This transaction is all about growth – and bringing together the complementary strengths of Asda and EG UK.

“We are creating an enhanced and more diverse Asda business that delivers even greater value for its customers on a daily basis in stores and online. Becoming the number two UK supermarket again and delivering a stronger and more compelling proposition for UK consumers are the metrics we will judge the success of this transaction by.”

Asda added: “The revised acquisition price reflects adjustments agreed between the two parties as they have worked through the detail of the transaction.

“The post synergy transaction multiple is unchanged. Asda will see an improvement in its business profile and expects to generate over £250m of incremental EBITDA on an annualised basis post synergies within the first two years.

“Synergies mainly arise through economies of scale of the combined entity, higher volumes and cross-selling opportunities from a large and highly complementary customer base.

“Lord Stuart Rose will continue in his role as chairman of the new, combined business alongside Dame Alison Carnwath as non-executive director as well as Mohsin Issa and Gary Lindsay as directors of the combined business.

“The board continues its recruitment process for a permanent chief executive.

“It is the intention of the Asda board to add new independent non-executive directors to the board to ensure continued strong corporate governance.”