# UK’s Asda to buy EG petrol stations unit in $2.9-billion deal
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-05-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Asda acquires EG petrol stations in $2.9B deal
Meta Description: Asda accelerates move into convenience sector with acquisition, creating combined revenueof nearly 30 billion pounds ($38 billion) and driving growth in the UK
URL: https://financedigest.com/uks-asda-to-buy-eg-petrol-stations-unit-in-2-9-billion-dealhtml

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LONDON (Reuters) -British supermarket Asda said it would buy the bulk of petrol station operator EG Group’s UK and Ireland business to speed up its move into the convenience sector, creating a company with combined revenue of nearly 30 billion pounds ($38 billion).

Asda, Britain’s third-largest grocer, and EG are both owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital. The unit of around 350 petrol stations and over 1,000 food-to-go locations will be valued at 2.27 billion pounds.

The deal will help spur Asda in its [drive to overtake Sainsbury’s and become Britain’s](https://www.financedigest.com/britain-sets-up-125-million-taskforce-to-drive-ai.html "Britain sets up 5 million taskforce to drive AI") No. 2 [supermarket as it rolls out the Asda](https://www.financedigest.com/uk-supermarket-asda-freezes-prices-of-500-products.html "UK supermarket Asda freezes prices of 500 products") Express across the EG petrol estate. EG will pay down debt.

This transaction is all about driving [growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business,”](https://www.financedigest.com/new-chief-financial-officer-joins-clusterseven-to-support-business-growth.html "New Chief Financial Officer Joins ClusterSeven to Support Business Growth") said Asda chairman Stuart Rose.

The Issa brothers bought Asda in 2021 and have already converted 166 EG sites to the “Asda on the Move” format.

Tesco leads the UK grocery [market with a 27.1% share](https://www.financedigest.com/countertop-spray-market-share-by-2028-upcoming-trends-and-analysis.html "Countertop Spray Market Share by 2028: Upcoming Trends and Analysis"), according to the most recent data by Kantar. Sainsbury’s holds 14.8%, ahead of Asda’s 13.9%.

The deal comes as consumers grapple with a cost-of-living crisis that has left grocers juggling surging food prices with a need to pay higher wages, while facing fierce [pricing competition from German discount groups](https://www.financedigest.com/tesco-reported-to-competition-watchdog-by-consumer-group-over-pricing-concerns.html "Tesco reported to competition watchdog by consumer group over pricing concerns") Aldi and Lidl.

Asda, which like rivals is competitive on the price of petrol at its large stores, said it planned to invest more than 150 [million pounds](https://www.financedigest.com/uks-nationwide-to-pay-340-million-pounds-to-customers-after-profit-leap.html "UK’s Nationwide to pay 340 million pounds to customers after profit leap") within the next three years to integrate EG.

Asda’s shareholders, which include its former owner U.S. retail giant Walmart Inc, will provide around 450 [million pounds of additional equity for the deal](https://www.financedigest.com/britains-jd-sports-to-buy-frances-courir-in-572-million-deal.html "Britain’s JD Sports to buy France’s Courir in 2 million deal"), it said. The grocer [reported like-for-like sales growth](https://www.financedigest.com/baby-food-industry-will-turn-to-drive-sales-growth-of-functional-dairy-ingredient-market-fact-mr-report.html "Baby Food Industry Will Turn To Drive Sales Growth Of Functional Dairy Ingredient Market, Fact.MR Report") of 7.8% in the three months through March compared with the previous year, while total revenues excluding fuel increased by 8% to 5.0 billion pounds.

EG has said it will use the proceeds from the sale to help pay down debt, following a separate deal involving its U.S. operations earlier in the year.

EG’s net [debt stood at close to $9.7 billion at the end of last year](https://www.financedigest.com/thames-water-reduces-bad-debt-11-in-a-year-with-fico-system.html "Thames Water Reduces Bad Debt 11% in a Year with FICO System"), more than seven times its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for 2022. It said the group’s net leverage would fall to below 5 times.

($1 = 0.7923 pounds)

(Reporting by Paul Sandle; additional reporting by Pablo Mayo Cerqueiro; editing by Kate Holton and Bernadette Baum)


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