Unions have expressed concern over Lancashire billionaires, the Issa brothers, plans to merge the UK operations of EG Group with Asda in a £2.3 billion deal.
EG Group said around 350 petrol stations and over 1,000 food-to-go sites in the UK and Ireland would be sold off to Asda as part of the deal. The combined group would have 170,000 employees and turn over of almost £30bn following the completed merger.
EG Group said the proceeds from the deal would be used to repay its debts as it wrestles with soaring interest rates on its billions of pounds of loans. The firm said it “will look to address upcoming maturities” on its existing portfolio of loans.
The Issa brothers completed their £6.8 billion acquisition of Asda from Walmart in February 2021. Both EG Group and Asda are chaired by former Marks & Spencer and Ocado Group chair Lord Rose, and EG Group is expected to retain its Blackburn HQ under the deal, with Asda remaining HQd in Leeds.
EG Group said its shareholders are providing around £450m of additional equity to fund the merger with Asda, and pledged to invest more than £150m within the next three years to fully integrate the combined businesses.
The latest Sunday Times Rich List, revealed earlier in May, saw the brothers’ wealth rise by £302m to £5.05bn over the last year.
Zuber Issa CBE, co-founder and co-CEO of EG Group, said: “This transaction with Asda represents an important strategic step for EG Group. Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience.
“This includes the ongoing investment and expansion of our EV charging business, evpoint, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.“
Unions have expressed concerns over the sustainability of the deal, however. Nadine Houghton, GMB National Officer, said: “GMB believes this merger requires proper scrutiny from the CMA.
“We are concerned rising interest rates will leave the debt of the UK’s third largest retailer unsustainable. More than 7,000 ASDA colleagues are already facing hire and rehire – this slashing of terms and conditions is just the tip of the iceberg.”
