02 October 2020 18:51
// The billionaire Issa brothers & TDR Capital agree terms with Walmart to acquire majority stake in Asda // The Issa brothers & TDR Capital to acquire Asda, with equal shareholdings; Walmart to retain an ongoing equity investment Asda is returning to British ownership for the first time in 21 years after Walmart agreed terms for the £6.8 billion sale of the Big 4 grocer to the Issa brothers and TDR Capital. Walmart confirmed that it has accepted a bid from a consortium led by Lancashire-based brothers Mohsin and Zuber Issa – the billionaire owners of petrol forecourt firm EG Group – following a lengthy auction process. Walmart, the US retail giant that has owned Asda since 1999, will retain a minority stake in the Big 4 grocer as part of the agreement, along with an ongoing commercial relationship and a seat on the board. They also said they would invest over £1 billion in the next three years to further strengthen Asda's business and its supply chain, and grow its convenience and online operations. The news comes more than a year after the proposed £12 billion merger between Asda and Big 4 rival Sainsbury's was blocked by competition regulators at CMA.
EG Group and TDR Capital will also face the challenge of keeping prices low amid tough economic conditions for shoppers and potential new tariffs on EU-imported foods, with the other Big 4 supermarkets all announcing a raft of price cuts in recent months. The Issa brothers sealed the deal after Walmart selected their consortium as the preferred buyer earlier this week, placing them in pole position ahead of a bid by US-based private equity firm Apollo. "We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing," Walmart chief executive Judith McKenna said. Asda chief executive Roger Burnley said: "This new ownership opens an exciting new chapter in Asda's long heritage of delivering great value for UK shoppers. "With our combined investment, expertise and ambition; Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues.
The brothers bring a wealth of experience in convenience retail as well as brand partnerships, and KFC, Starbucks and Krispy Kreme are among the companies with which EG Group works. The businessmen leased their first petrol station in 1999 – the same year Walmart bought Asda – and today have more than 6,000 dotted across 10 countries. Judith McKenna, the chief executive of Walmart International, said the deal created the "right ownership structure" for Asda. Lancashire's billionaire Issa brothers have clinched their deal to buy Asda, it was announced today. Current US owners Walmart have agreed to sell the supermarket giant to a group led by the EG Group petrol station tycoons in a £6.8 billion deal.
After a successful period as part of Walmart we are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the UK." We are proud to be investing alongside Mohsin and Zuber, who have built EG Group into a global convenience retailer and will now bring that experience to bear at Asda." With our combined investment, expertise and ambition; Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues." Judith McKenna, president of Walmart International said: "We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda." The Blackburn-born Issa brothers, among the richest families in the UK with an estimated worth in excess of £1billion, have recently been diversifying their interests from their main business involving almost 6,000 petrol stations and forecourt convenience stores across 10 countries worldwide. The company – headquartered in a new £35m building off Blackburn's Haslingden Road – merged with private equity firm TDR Capital's European Forecourt Retail Group in 2016 to create the EG Group as it moved into Europe and the US. The Blackburn-based billionaires acquired the supermarket giant in a £6.8bn deal on Friday and intend to expand its portfolio of sites across the country as they work to reposition the business. Zuber and Mohsin Issa own EG Group, whose subsidiary Euro Garages has more than 5,200 petrol stations across the UK and Europe. The brothers agreed to acquire a majority stake in Asda – a wholly owned UK business of US-based Walmart – in a consortium with private equity firm TDR Capital on a debt-free and cash-free basis. Under the new ownership structure, the Issa brothers and TDR Capital become majority owners and Walmart will retain an equity investment in the business, with an ongoing commercial relationship and a seat on the board. The new owners will continue to build the business "at a time of evolution in the UK food retail sector, and benefitting from fresh capital and expertise", according to a statement issued on behalf of the consortium. Mohsin and Zuber Issa said: "We believe that our experience with EG Group, including our expertise around convenience retail and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy." Asda, which has more than 100 stores across the North West, will remain headquartered in Leeds, where it was founded, and continue to be led by chief executive Roger Burnley, who will serve on Asda's new board alongside representatives appointed by TDR Capital, the Issa brothers and Walmart. The Issa brothers continued: "We are very proud to be investing in Asda, an iconic British business we have admired for many years. When brothers Mohsin and Zuber Issa purchased the run-down garage in Brandlesholme Road back in 2001, there was little to distinguish it from so many others up and down the country. Nearly 20 years on, the Issa brothers are worth more than £3bn and have just bought Asda for £6.8bn. The deal with US shopping giant Walmart puts Asda back into British ownership for the first time in more than 20 years. After leaving his job at the mill, Mohsin and Zuber's father bought his own garage and the young brothers would help out by selling petrol and refreshments. The deal to bring Asda back into British hands is said to be worth £6.5bn, with private equity firm TDR, which owns half of the EG Group, expected to put in a large chunk.