Asda’s owners sprung a surprise last week. The entrepreneurial Issa brothers, Mohsin and Zuber, and their canny private equity backers at TDR Capital, announced they would pay £450 million to help fund Asda’s acquisition of EG UK and Ireland, their petrol forecourts empire.
However, it turns out this was not quite the act of generosity it first appeared. The entire £450 million is being funded from the proceeds of selling Asda’s assets. The brothers and TDR built up EG with a series of debt-fuelled acquisitions. They acquired Asda in 2020 and are now using the supermarket chain’s assets to slash the debts in their forecourts business.
Asda is buying EG UK for £2.3 billion, creating a retailing powerhouse making £30 billion of sales from 581 supermarkets and 700 petrol forecourts.
The deal will provide a vital cash infusion for EG ahead of a critical £7 billion refinancing in 2025. But in the small print, it has emerged that the £450 million of equity the owners are pumping in to fund the deal will come entirely out of the £1.7 billion they received from the sale of 27 Asda warehouses to investment giant Blackstone in a top-of-the-market sale and leaseback deal in 2021.
This is not the first time the Issas and TDR have demonstrated a knack for greatly minimising their own investments in mega deals. They stumped up just £200 million of equity to pull off the £6.8 billion acquisition of Asda in 2020.
The Sunday Times. To read the full story click here
