British supermarket group Asda said it would buy gas station operator EG Group’s UK and Ireland business to accelerate its move into the convenience sector, creating a company with combined revenue of nearly ￡30 billion (US$37 billion).
Asda, Britain’s third-largest grocer, and EG are both owned by brothers Zuber and Mohsin Issa, and private equity group TDR Capital LLP.
The deal, which includes about 350 gas stations and more than 1,000 food-to-go locations, values EG at ￡2.27 billion, including debt, the groups said yesterday.
Photo: Reuters
Asda has said it is aiming to overtake Sainsbury’s to become Britain’s No. 2 supermarket and the deal would enable it to roll out Asda Express across the EG estate.
Tesco PLC leads the market with a 27.1 percent share, according to the most recent data by Kantar. Sainsbury’s holds 14.8 percent of the market, ahead of Asda on 13.9 percent.
Since the Issa brothers bought Asda in 2021, 166 EG sites have already been converted to the “Asda on the Move” format.
The deal comes as consumers grapple with a cost-of-living crisis that has left grocers trying to juggle the surging price of food with a need to pay higher wages, while also competing with German discount groups Aldi and Lidl.
Asda, which like its rivals is competitive on the price of gas sold at its large stores, said it planned to invest more than ￡150 million within the next three years to integrate EG.
Asda’s shareholders, which include its former owner US retail giant Walmart Inc, would provide about ￡450 million of additional equity for the deal, it said.
The grocer also reported like-for-like sales growth of 7.8 percent in the three months to the end of March compared with the previous year, while total revenue excluding fuel increased by 8 percent to ￡5.0 billion.
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