Asda will acquire 350 petrol forecourts and 1,000 takeaways in the UK and Ireland from its sister business EG Group, in a deal worth £2.27bn, helping the retailer in its ambition of overtaking Sainsbury’s to become Britain’s second biggest grocer.
The supermarket group’s chair, Stuart Rose, said the acquisition would create a “powerful consumer champion” that was committed to being a “price leader” on fuel and the lowest price of the UK’s big four supermarkets on groceries.
However, the deal is funded by an additional £770m of new loans and £450m in new funds from the billionaire Issa brothers and the private-equity firm TDR Capital, who bought Asda in 2020 and also own EG.
A further £1.1bn will be raised through the sale and lease-back of Asda supermarkets, heaping new financial liabilities on the business which has already struggled to keep pace with some of its bigger rivals in the battle against inflation.
The combined group is expected to serve about 21 million customers every week and will have revenues of nearly £30bn. Both businesses are chaired by Rose, the former boss of Marks & Spencer. He said the business will have a “fully sustainable capital structure” and that adding profits from EG’s UK forecourts would help service its extra debts.
Asda is currently the UK’s third biggest supermarket with a 13.9% share of the grocery market, according to the research firm Kantar, compared with Sainsbury’s, which has 14.8%. After it buys EG, the combined group will operate about 640 supermarkets, 700 petrol forecourts and 1,000 takeaways, including large franchises for KFC and Subway. All of the EG sites acquired will be rebranded as Asda – 166 EG locations had already been renamed Asda on the Move.