Private equity firm TDR Capital LLP said on Friday it agreed to acquire Zuber Issa’s shares in Leeds-based supermarket giant Asda, taking its ownership of Asda to 67.5%.
The transaction is set to complete in Q3 of 2024. Zuber’s brother Mohsin Issa remains a co-owner in Asda with a 22.5% stake. Walmart Inc retains 10%.
Blackburn-based billionaire brothers Mohsin and Zuber Issa and TDR Capital completed the £6.8 billion acquisition of a majority ownership stake in Asda from Walmart Inc. in 2021.
Asda also said it is undertaking an extensive international executive search to find a permanent CEO to lead the business in its next phase of growth.
Friday’s announcements follow Asda’s recent refinancing of more than £3.2 billion of its debt.
Asda said its net debt at the end of Q1 2024 was £3.8 billion, and said it is “fully committed to further deleveraging.”
Zuber Issa will also step down as Co-CEO of EG Group after reaching an agreement to buy its remaining UK forecourt business and standalone foodservice locations for £228 million.
EG Group said it will use the proceeds to repay debt and strengthen its balance sheet. Zuber will retain his existing shareholding in EG Group while brother Mohsin will become sole CEO.
Gary Lindsay and Tom Mitchell, Managing Partners of TDR Capital, said: “We first invested into Asda over three years ago, seeing a huge opportunity to cement its position as one of the UK’s leading retail brands.
“By combining our investment and sector expertise with Asda’s heritage of delivering value for customers, we have already made significant progress in transforming Asda.
“We have added a scale convenience business, grown Asda’s store footprint from 623 to 1,200 stores and food-to-go sites, and launched a hugely successful loyalty app, which now has six million active customers, accounting for around half of total sales.
“We remain focused on investing in Asda’s stores and online, as well as its colleagues through the highest pay in the traditional supermarket sector, to drive sustainable, long-term growth.
“As majority owners, we will continue to work closely with the Asda management team and colleagues across the business to support the ambitious strategy, which we believe is the right one to continue to move Asda forward.”
Asda Chairman Stuart Rose said: “On behalf of the board, I welcome TDR’s increased investment in Asda – which is a clear sign of its commitment to the business.
“Asda’s heritage is in delivering great value for customers on a daily basis across its entire proposition from groceries to fashion and food-to-go – and the board has never been more committed to deliver on this promise.
“The board and shareholders continue to put in place the building blocks to position Asda for long-term success and that is good news for colleagues, customers, suppliers and other business partners.”
Mohsin Issa said: “Today’s announcement further underlines my own and TDR’s confidence both in Asda and the UK consumer market.
“As a shareholder group, we are excited about the growth journey we are on. Asda is an iconic British brand and we are committed to setting it up for long-term success and delivering great value for customers across the UK.
“To that end, I am incredibly proud of the investments we have already made in transforming the Asda business, including the launch of the new Asda Express convenience format, the Asda Rewards customer loyalty scheme and the £800m investment in a best in class IT infrastructure to bring new data and insight capabilities.
“Above all, I am proud and grateful for the everyday commitment and loyalty of our Asda colleagues and their dedication to our customers.
“I also want to add my personal support and best wishes for Zuber’s plans as we continue our successful family partnership, working as partners on our personal co-investments, family office philanthropy and Issa Foundation projects.”
Zuber Issa said: “Since Mohsin and I, alongside TDR, took ownership of Asda, we have driven a period of significant investment and entrepreneurial growth activity. Notably, Asda acquired a market-leading UK convenience retail and foodservice store business from EG Group.
“With the divestment of my Asda shares, I will now turn my attention towards leading and managing the remaining EG UK forecourt sites that I have personally acquired, and spend more time on my charitable endeavours.
“I am pleased to see TDR increasing its investment in Asda. With Mohsin and TDR’s ongoing focus and shareholding, I am confident that Asda will achieve its growth ambitions.”