// Billionaire Issa brothers and TDR Capital post update on agreement to acquire Asda in £6.8bn deal
// Asda’s forecourts business will be sold to the brothers’ EG Group for £750m
// The new owners plan to sell certain Asda distribution assets to institutional real estate investors following the CMA’s clearance
The Issa brothers have posted an update around their £6.8 billion takeover of Asda, highlighting details around the the grocers’ forecourt business and their initial names of the new board of directors.
News of Asda returning to British ownership for the first time in 21 years was first announced in October last year.
The Issa brothers said the takeover process was now on track to be complete by later this month, and they have have reached an agreement with US retail giant Walmart, which will retain a minority interest in the Big 4 grocer.
- Now that it’s returned to British ownership, what’s next for Asda?
- Confirmed: Walmart agrees £6.8bn sale of Asda to Issa brothers & TDR Capital
Mohsin and Zuber Issa also confirmed that Asda’s forecourts business would be sold to EG Group for the value of £750 million.
EG Group is the global convenience and forecourts retailer owned by the Issa brothers and TDR Capital.
The Issa brothers and TDR Capital intend to launch the syndication of €840 million (£729 million) of institutional term loan B facilities and, later, the offering of £2.2 million of senior secured notes and £500 million of senior notes.
The Asda board will now comprise of Mohsin and Zuber Issa, TDR Capital partners Manjit Dale and Gary Lindsay, and Walmart executive vice president and chief financial officer Chris Nicholas. Asda chief executive Roger Burnley will also join the board.
In due course, independent directors will be appointed to the board.
The transaction remains subject to clearance from the CMA.
A detailed integration plan will ensure a seamless transition into EG Group’s UK operations, which have integrated four acquisitions since 2015.
The forecourts will continue to be branded Asda and will remain a price leader in the fuel market.
The Issa brothers and TDR Capital said that following the CMA’s clearance, they plan to sell certain distribution assets to institutional real estate investors.
Asda will continue to operate the distribution assets and the transaction will have no day-to-day impact on the operations of those sites, Asda’s supply chain or workforce.
“Asda is an iconic British business that we have known and loved since we were children,” Mohsin and Zuber Issa said.
“We are proud to bring its ownership back to the UK and delighted that, with the support of TDR Capital and Walmart, we can invest in its future.
“Local control means that strategic decisions will be more closely aligned with colleagues, customers and communities.
“With TDR Capital, our long time partners, we are committed to supporting Roger Burnley, chief executive of Asda, and his team as they continue to reposition the business to drive long-term growth.
“We are putting in place a robust capital structure to support that growth strategy, and we are confident that external investors will share our belief in Asda’s strong fundamentals and exciting future prospects.
“Looking ahead, and subject to the required regulatory approvals, we look forward to working with our Asda colleagues to build an even stronger, more differentiated retailer – including through the investment of more than £1 billion in the next three years to further strengthen the business and its supply chain.
“We are also excited about the proposed integration of the Asda forecourts into EG’s established UK operations, which we believe would underpin the future growth of the combined network.”
Lindsay said: “We are very proud to be investing alongside Mohsin and Zuber and supporting the next phase of Asda’s exciting growth journey.
“Asda has strong foundations and under the leadership of Roger and his team we look forward to seeing the business move from strength to strength in the future.”
The acquisition of Asda by the Issa brothers and TDR Capital is expected to complete later this month.
The transaction will remain subject to clearance from the CMA, which is currently expected in the second quarter this year.