Asda Group has said it will acquire petrol station operator EG Group’s UK and Ireland business, creating a company with combined revenues of nearly £30bn.
The news confirms a report by Sky News City editor Mark Kleinman last week, which said the “finishing touches” were being put on the deal.
Asda is the UK’s third-largest supermarket, and – like EG – is owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital.
The £2.27bn deal will mean the acquisition of around 350 petrol stations and more than 1,000 food-to-go locations.
The resulting behemoth will have around 170,000 employees, nearly 600 supermarkets and 700 petrol forecourts.
Asda chairman Stuart Rose said: “Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen.
“Throughout my career in retail, one thing has always been true – that meeting the evolving needs of customers is the route to growth.
“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.”
Asda co-owner Mohsin Issa said that the deal would be “positive news for motorists, as we will be able to bring Asda’s highly competitive fuel offer to even more customers”.
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Talks about a combination of Asda and EG UK have been under way for more than six months, and were initially reported by The Sunday Times in January.
The GMB union raised concerns in April and earlier this month that the tie-up could threaten food supplies, increase fuel prices and would only benefit the “super-wealthy elite”.
Nadine Houghton, GMB national officer, said: “The billionaire Issa Brothers and the elite multi-millionaire private equity fund managers at TDR capital want to use ASDA as a cash cow to pay off their debts.
“This merger is wrong on so many levels – it is wrong for consumers and will increase food prices, it is wrong for drivers with a chilling effect on fuel prices, it is wrong for ASDA’s workers and it is wrong for ASDA’s business.”
The Competition and Markets Authority said the ultimate owners of Asda are the same ultimate owners in the same proportion of ownership as EG Group and, therefore, the merger would not qualify for a CMA review.
Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: “The idea is that by being super-competitive on petrol, Asda may win more grocery custom from rivals at a time when grocery top-ups are all the rage, rather than dedicated weekly shops.
“But while the cost-of-living crisis rages and so many consumers shop frenetically around for the lowest possible price, the search for value may be prioritised over convenience for the foreseeable future.”
