Proactive Investors - Supermarket giant Asda is set to merge with petrol forecourt owner, EG UK, in a deal that is touted to be worth £3bln and create a business with a combined value of £10bln.
The British arm of the petrol station and food service company is owned by EG Group, a company set up and run by siblings, Mohsin and Zuber Issa.
The pair and private equity firm, TDR Capital, headed a consortium that bought Asda for almost £7 billion in late 2020.
Once merged, the group will have around 600 supermarkets, 700 petrol forecourts and 100 convenience stores.
Annual revenues of the two are predicted to amount to around £30bln a year and will create a workforce of close to 170,000 workers.
The deal will use a £500mln debt financing facility from Apollo Global Management (NYSE:APO), the private equity firm which also showed interest in purchasing Asda when Walmart (NYSE:WMT) put it up for sale three years ago.
This year, the US group grabbed headlines for its interest in purchasing energy engineer Wood Group and retailer THG (LON:THG), before dropping out of both deals and sparking intrigue into where its next venture would lie.
The deal could see synergies of close to £100mln, according to Bloomberg, and may also help unburden EG Group’s growing debt pile – with around £7bln due to be repaid by the forecourt firm by 2025.
The Competition and Markets Authority is not believed to be scrutinising the deal because it already sees the two companies as one due to the Issa Brothers’ ownership of both businesses.