Asda owners weigh up £12bn merger with EG Group petrol stations

Merger talks are being discussed ahead of refinancing at EG Group, which has £7bn of debt due in 2025, according to The Sunday Times. 

The Issa brothers and joint owner TDR Capital hope that by combining both profitable businesses – supermarket giant Asda, which they bought two years ago, and EG Group, their sprawling petrol forecourt empire – they will be able to refinance the debt on far more favourable terms. 

In any merger, Lord Stuart Rose would likely chair the combined group. Bankers at Barclays and Rothschild are reportedly advising the brothers and TDR Capital on any potential deal, which could cost between £11bn and £13bn.

A successful merger would create an enormous business with 581 supermarkets, 700 petrol forecourts and more than 100 convenience stores. 

The merger is just one option that Mohsin and Zuber Issa are considering to cut debt in the face of surging interest rates. 

While EG Group has said it would not consider selling operating businesses, due to currently suppressed market values, it would consider doing so in the future. 

Any merger would also face huge scrutiny from the Competition and Markets Authority and perhaps even government intervention to protect petrol prices in the face of the ongoing cost-of-living crisis.