Asda has announced its intent to acquire EG Group UK and Ireland today in a deal valued at £2.27 billion ($2.82 billion).
As part of the acquisition, Asda will gain 350 petrol filling station sites and over 1,000 food-to-go locations across the UK, though EG Group will retain around 30 PFS sites for wider group development.
Both businesses are owned by the Issa brothers and investment funds managed by TDR Capital.
With the merger, Asda plans to leverage its growing loyalty scheme and integrate convenience, fuel, general merchandise, grocery, foodservice, and omnichannel retailing.
Shareholders are providing £450 million ($559 million) in equity to fund the transaction, and Asda intends to invest an additional £150 million ($186 million) within the next three years.
“Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen,” says Asda chair Stuart Rose. “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.”
The transaction is expected to be finalized in the fourth quarter of 2023.
Asda’s acquisition of EG UK&I is anticipated to unlock significant growth opportunities in the expanding convenience and foodservice markets.
Several EG sites have already been successfully converted to ‘Asda on the Move’ outposts and all acquired EG UK&I sites will operate under the Asda brand.
Since October 2022, Asda has acquired 119 convenience sites with attached PFS from the Co-op Group and launched three standalone Asda Express convenience stores.
In the three months ending in March 2023, Asda’s like-for-like sales increased by 7.8% compared to the previous year, and total revenues, excluding fuel, rose by 8% to £5 billion ($6.2 billion).
Mohsin Issa, co-owner of Asda, will continue to lead the business during the integration of the EG UK&I operations.