Asda has completed its purchase of forecourt retail giant EG Group at an enterprise value of £2.07bn. It vowed the deal will mean lower fuel and grocery prices “for millions”.
The deal will power Asda’s plans to become a force in “value-led convenience” as it rolls out Asda Express stores to 356 EG locations in the UK – 119 former Co-op stores have already switched to the Express format.
Asda has 478 convenience stores at present and intends to open another 300 by the end of 2026.
The deal is also expected to accelerate an Asda push into food service – franchise agreements with 462 Greggs, Burger King and Subway outlets will also transfer to Asda. The company also owns Leon and aims to introduce the restaurant into its stores.
The combined businesses will generate revenues of around £28bn.
Asda co-owner Mohsin Issa, who along with brother Zuber also founded EG, said: “This is a great day for Asda and for millions of UK consumers. I could not be more proud or excited that the iconic Asda sign is now coming to hundreds more communities.”
Asda chair Lord Stuart Rose said: “As families continue to face cost-of-living challenges, bringing Asda’s long-standing value in groceries and fuel to even more communities is a win for UK consumers.
“The combination of Asda and EG UK will only create more opportunities for Asda to bring that focus on value to even more communities, as well as driving the sustainable growth of the business through a convenience offer of genuine scale and substance.”
Issa added: “We have worked at pace over the last 12 months to deliver a compelling convenience proposition from a standing start, as well as investing more than £120m in lowering the price and further improving the quality of our food. With the deal complete, we can now focus on delivering the growth opportunities.
“That means lowering the price of fuel for more motorists, bringing Asda’s great value and quality to more communities, offering greater opportunities to our supplier partners and creating sustainable job opportunities for colleagues in our stores and depots.”
Gary Lindsay, managing partner of TDR Capital, which backed the Issas’ original acquisition of Asda, said: “This transaction is all about growth and bringing together the complementary strengths of Asda and EG UK.
”We are creating an enhanced and more diverse Asda business that delivers even greater value for its customers on a daily basis in stores and online. Becoming the number two UK supermarket again and delivering a stronger and more compelling proposition for UK consumers are the metrics we will judge the success of this transaction by.”
The valuation of the deal is about £230m less than originally envisaged, which Asda said ”reflects adjustments agreed between the two parties as they have worked through the details of the transaction.”
Asda is still on the hunt for a permanent chief executive and will recruit new independent non-executive directors to ensure strong corporate governance.
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