British supermarket chain Asda is set to acquire all operations of retailer EG Group in the UK and Ireland, including 350 petrol filling stations (PFS), in a £2.27bn deal.
Following the deal, Asda plans to invest around $186m in the next three years to fully integrate the “combined business” while the EG Group would retain just about 30 PFS sites in the UK.
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The chair of Asda says the acquisition would create a “consumer champion” as the company intends to bring its low-cost pricing models to the customers.
Asda’s shareholders TDR Capital LLP and US-based retailer Walmart have provided an estimated $558m of additional equity to fund the deal. The company statement said that the new deal could provide the “lowest supermarket fuel prices” to customers.
The EG Group will use the net proceeds from the sale to repay its debts.
EG Group co-founder and CEO Zuber Issa said: “Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued rollout of its successful convenience retail and fuel.”
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By GlobalData“This includes the ongoing investment and expansion of our EV charging business, EV-point, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.”
In October 2022, Asda bought the Co-operative Group’s 129 petrol stations in a $745m deal with the retail chain.
Following this, the UK Government launched an investigation in January after the deal between Co-op and Asda. The Competition and Markets Authority (CMA) found that the business could lead to “consumers and businesses in these areas facing higher prices or lower quality services when shopping or buying fuel”.
In March 2023, CMA’s mergers senior director Colin Raftery said: “While competition concerns don’t arise in relation to the vast majority of the 132 sites bought by Asda, there’s a risk that customers could face higher prices or worse services in a small number of areas where Asda would face insufficient competition in either groceries or fuel after the deal goes through.”
