A mergerof Asda and the UK business of petrol forecourts chain EG Group is likely to be completed by April end, a media report said.
A successful merger which would create a mega retail entity worth around £12 billion, is expected to ease EG’s debt burden and help its owners negotiate its refinancing on more favourable terms.
Both Asda and EG Group are jointly owned by Blackburn’s billionaire Issa brothers – Mohsin and Zuber – as well as the London-based equity firm TDR Capital. Barclays and Rothschild are understood to be advising them on the potential merger.
Likely to be structured as a takeover of EG UK by Asda, the deal could add to the supermarket chain’s current debt of £4.7 bn, according to a Times report.
The Issas and TDR Capital had snapped Asda from Walmart for an enterprise value of 6.8 bn two years ago, bringing the Leeds-headquartered supermarket giant back under British control.
Mohsin and Zuber, who made a modest beginning to their entrepreneurial journey when they established EG Group with a single forecourt in Bury, have expanded their business quickly over the years.
Jointly ranked sixth in the Asian Rich List with a combined wealth of £6.5 bn, the siblings also bought the Cooplands and Leon brands as they diversified their portfolio.
EG, which needs to refinance its £7 bn debt by 2025, announced earlier this month a $1.5 billion (£1.2 billion) sale and leaseback deal on 415 stores in the US.
Zuber had said in a statement at the time that the management was committed to “further significant deleveraging”.
If Asda and EG UK are combined, the resulting entity will have 581 supermarkets, more than 100 convenience stores and 700 petrol forecourts.
