Asda owners to unveil £10bn merger with petrol stations giant EG

Published

1 year ago

May 25, 2023

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The owners of Asda and petrol stations giant EG Group were on Thursday applying the finishing touches to a £10bn merger of their operations in Britain.

Sky News has learnt that the billionaire Issa brothers – Mohsin and Zuber, who launched EG Group – and TDR Capital are aiming to announce the tie-up on Friday.

The combination of Asda and EG UK will create a behemoth with 170,000 employees and annual revenues of close to £30bn.

In total, the group will operate nearly 600 supermarkets, 700 petrol forecourts and 100 convenience stores.

More than 20m customers pass through Asda stores and EG’s UK forecourts each week.

It will represent the biggest deal in financial terms in the career of Lord Rose of Monewden, the former Marks & Spencer and Ocado Group chairman who now chairs both Asda and EG.

Lord Rose and the enlarged group’s shareholders are expected to use the deal to accelerate Asda’s drive into the convenience store sector – a segment it has historically been slow to embrace even as rivals Asda and J Sainsbury have expanded into it aggressively.

“Having a bigger and better convenience proposition across such a vast network and utilising Asda’s brand positioning makes enormous sense during a cost-of-living crisis,” said one rival retail executive.

Banking sources said that Apollo Global Management had been lined up to provide more than £500m of private placement debt to finance the deal between Asda and EG UK.

Apollo was among the leading contenders to buy Asda from Walmart, the American retail giant, when it was put up for sale in 2020.

That auction was initiated by Walmart after the Competition and Markets Authority blocked the merger of Asda and Sainsbury’s.

Talks about a combination of Asda and EG UK have been underway for more than six months, and were initially reported by The Sunday Times in January.

Last month, Bloomberg News said the tie-up would generate more than £100m of synergies between the two businesses.

Lenders providing financing to the transaction include are thought to include Barclays and HSBC, with the former also advising on the deal alongside Rothschild.

Roughly £7bn of EG’s debt is due to be repaid in 2025, while the combined group will own commercial real estate assets valued at more than £9bn.

Friday’s merger will be structured as an acquisition of EG UK by Asda costing approximately £1.25bn, and will create one of Britain’s biggest private sector employers.

Competition watchdogs have already closely scrutinised the implications of Asda and EG being controlled by the same shareholders when the supermarket chain was acquired by them for £6.8bn.

Asda last year also struck a deal to acquire 130 petrol stations from the Co-op Group for about £600m, and has since offered to offload 13 sites to allay competition concerns.

There are not expected to be significant redundancies announced as a result of the Asda-EG deal, with EG retaining its headquarters in Blackburn, Lancashire, and Asda remaining based in Leeds, Yorkshire.

Neither Asda nor EG could be reached for comment.

Business

Telegraph bidders given new deadline as £100m Spectator sale looms

Published

14 hours ago

September 8, 2024

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Telegraph bidders given new deadline as £100m Spectator sale looms

The remaining bidders for The Daily Telegraph have been given a deadline for revised bids for the right-leaning newspaper as its stablemate, The Spectator magazine, clinches a £100m sale to the hedge fund tycoon Sir Paul Marshall.

Sky News understands that RedBird IMI, the Abu Dhabi-backed entity which was thwarted in its efforts to buy the media titles by a change in ownership law, has asked at least three parties to table second-round offers on 27 September.

It comes after bidders began holding talks with Telegraph bosses last week about the company’s business plan.

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The remaining parties are understood to include Sir Paul and National World, the London-listed media group run by newspaper veteran David Montgomery.

At least one other party whose identity has yet to be disclosed publicly is also in contention to buy the newspapers.

A separate bid orchestrated by Nadhim Zahawi, the former chancellor, is the subject of bilateral discussions with IMI, the Abu Dhabi-based venture which wanted to take a controlling stake in the British media assets before being blocked by the government.

Sky News revealed exclusively last month that Sir Paul was the frontrunner to buy The Spectator, which along with the Telegraph titles was owned by the Barclay family until their respective holding companies were forced into liquidation last year.

His deal for The Spectator, which will be implemented through Old Queen Street Ventures, will be announced this week, and potentially as early as Monday.

It will also include the art magazine Apollo.

RedBird IMI, a joint venture between IMI and the American investor RedBird, paid £600m last year to acquire a call option that was intended to convert into equity ownership.

A sale of The Spectator for £100m would leave it needing to sell the Telegraph titles for £500m to recoup that outlay in full – or more than that once RedBird IMI’s fees and costs associated with the process are taken into account.

One source said the price RedBird IMI had secured for The Spectator had exceeded expectations and left it well-placed to break even on its investment.

“The original decision to pre-empt an auction has been vindicated by the level of interest since it started,” the source said.

Of the unsuccessful bidders for the Telegraph, Lord Saatchi, the former advertising mogul, offered £350m, while Mediahuis, the Belgian publisher, also failed to make it through to the next round of the auction.

Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding earlier in the summer amid concerns that he would be blocked on competition grounds.

Sky News recently revealed that Mr Zahawi had sounded out Boris Johnson, the former prime minister, about an executive role with The Daily Telegraph if he succeeded in buying the newspapers.

IMI is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan.

The Lloyds debt, which totalled more than £1.15bn, was repaid by RedBird IMI on behalf of the family.

RedBird IMI’s attempt to take ownership of the Telegraph titles and The Spectator was thwarted by the last Conservative government’s decision to change media law to prevent foreign states exerting influence over national newspapers.

Spokespeople for RedBird IMI and Sir Paul declined to comment.

Business

Bank of London finalises capital-raising after HMRC winding-up petition

Published

1 day ago

September 7, 2024

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Bank of London finalises capital-raising after HMRC winding-up petition

A clearing bank launched just three years ago is raising tens of millions of pounds of fresh funding just days after it was served with a winding-up petition by the UK tax authorities.

Sky News understands that The Bank of London, which attempted to rescue Silicon Valley Bank UK last year, is progressing plans for the capital-raising, which one person close to the company said could secure “up to £50m”.

The precise figure was unclear this weekend.

The new funding is understood to be being lined up from a number of investors including an entity called Aphorism Holding, according to the person.

Nada Hadadi, a wealthy investor who was suggested as being the primary source of the capital, has in fact only contributed a six-figure sum.

News of the company’s capital-raising plan comes days after it announced that Anthony Watson, its founder and chief executive, was stepping down to become a senior adviser and non-executive director of its holding company.

HM Revenue & Customs had issued a winding-up petition against The Bank of London’s holding company over unpaid taxes.

The liability has now been settled, according to an insider.

It described the issue as a “simple administrative handling delay caused by an internal miscommunication, which has been addressed”.

“We spoke with HMRC on Friday morning, and they are currently updating the filing.

“While this update may take a couple of days to reflect online, it is in process.”

The Bank of London claims to have amassed 4,500 clients since its launch but was outgunned last year by HSBC in a weekend race to rescue SVB UK.

Business

Body Shop’s remaining stores saved after rescue deal struck

Published

2 days ago

September 7, 2024

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Body Shop's remaining stores saved after rescue deal struck

More than 100 Body Shop stores have been saved from closure after a deal was struck to rescue one of Britain’s best known high street chains.

The well-known retailer was bought out of administration by a consortium led by “Cosmetics King” Mike Jatania.

The millionaire tycoon’s investment firm Aurea announced the completion of the acquisition on Saturday.

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Mr Jatania and Charles Denton, former chief executive of beauty brand Molton Brown, will head the new leadership team.

In a statement, Aurea said the deal would “steer the Body Shop’s revival and reclaim its global leadership in the ethical beauty sector it pioneered”.

It is understood there are no immediate plans to shut any of its 116 remaining UK stores.

Sky News revealed earlier this week that Aurea was poised to finalise the buyout as it lined up more than £30m in new financing.

Mr Jatania previously ran Lornamead – the owner of personal care brands including Lypsyl, Woods of Windsor, Yardley, and Harmony haircare – which he sold to rival Li & Fung for around £155m more than 10 years ago.

The Body Shop fell into administration in early February after previous forecasts for how much funding it would need to keep going proved too low.

In the weeks that followed, administrators warned hundreds of jobs would be lost and dozens of shops closed.

The business had employed about 1,500 store workers before its collapse into insolvency.

The company’s administration underlined the decline of the high street stalwart.

It was founded in 1976 by Dame Anita Roddick, trading out of a small shop in Brighton, which made its name selling cruelty-free fair trade products.

Mr Jatania, co-founder of Aurea, said: “With the Body Shop, we have acquired a truly iconic brand with highly engaged consumers in over 70 markets around the world.

“We plan to focus relentlessly on exceeding their expectations by investing in product innovation and seamless experiences across all of the channels where customers shop while paying homage to the brand’s ethical and activist positioning.”

Charles Denton, chief executive of the Body Shop, said: “We believe there’s a sustainable future ahead and working closely with the management team we aim to restore the Body Shop’s unique, values-driven, independent spirit.”