The billionaire Issa brothers are reportedly racing to complete a merger of the Asda supermarket chain and their UK petrol stations in a bid to slash debt.
The Issas and private equity backers TDR Capital are looking to combine Asda, which they bought back in October 2021, and their sprawling network of petrol forecourts operating under the EG Group UK division by the end of next month, according to The Sunday Times.
The £12bn deal would likely be structured as a takeover of EG UK by Asda, resulting in more debt being heaped onto the supermarket’s balance sheet, which already stands at £4.7bn.
Talks over combining the two businesses emerged in January, with plans now being put in place rapidly.
The deal would create a sprawling group with 581 supermarkets, 700 petrol forecourts and more than 100 convenience stores, but any such move would likely face intense scrutiny from the Competition and Markets Authority.
The Issa brothers and TDR Capital need to refinance £7bn on debt by 2025, all in an environment where interest rates have risen sharply.
The owners hope that combining the two profitable, cash-generative businesses will allow them to refinance on better terms.
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