The deal includes approximately 350 petrol forecourt sites and over 1,000 food-to-go locations, including 80-store food-to-go and coffee chain LEON, with EG Group retaining the Cooplands bakery café chain and other foodservice operations internationally
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The acquired EG Group sites are set to become Asda Express and Asda on the Move locations | Photo credit: Asda
EG Group has agreed to sell the majority of its UK and Ireland fuel, foodservice, grocery and merchandise business to UK supermarket giant Asda for an enterprise value of £2.27bn ($2.8bn).
Mohsin and Zuber Issa, who founded EG Group in 2001, and TDR Capital jointly acquired a majority stake in Asda from Walmart in a £6.8bn ($8.4bn) deal in February 2021.
In an EG Group press release, the Issa brothers said the new deal with Asda marks a ‘transformational combination’ of the two businesses.
The global petrol station forecourt operator said the transaction, which consists of approximately 350 petrol forecourt sites and over 1,000 food-to-go locations and is expected to complete in the fourth quarter of 2023, will enable it to accelerate growth internationally across Europe, the US and Australia.
Alongside continuing to operate in the US, Australia, Germany, France, Italy, the Netherlands, Luxembourg and Belgium, EG Group will also retain approximately 30 UK forecourt sites, its Lancashire headquarters and the Cooplands bakery café business it acquired for an undisclosed sum in October 2021.
The petrol station forecourt operator added that ‘certain other foodservice brands will also be retained’, but Asda will assume ownership of 80-strong food-to-go and coffee chain LEON.
The transaction will allow the supermarket chain to explore opportunities to introduce LEON into its existing estate, Asda said in a separate press release.
EG Group acquired LEON for around £100m ($139m) in April 2021.
“This transaction with Asda represents an important strategic step for EG Group. Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience. I am confident the UK&I business will go from strength to strength under Asda’s ownership,” said Zuber Issa, co-founder and co-CEO of EG Group.
Asda, which is the third largest supermarket chain in the UK by market share, said the move will drive its shift into an omnichannel retail platform and accelerate its move towards convenience.
The acquired EG Group sites are set to become Asda Express and Asda on the Move locations.
Launched in October 2020, the Asda On the Move forms part of the supermarket chain’s strategy to open more convenient roadside and neighbourhood locations. 166 EG sites have already been converted to Asda on the Move outlets, with a further 50 slated to open by the end of 2023.
Seeking to gain a greater market share of the fast-growing convenience industry, Asda Express was launched in 2022 as part of the retailer’s long-term strategy to become the UK’s second largest supermarket chain. It currently operates more than 640 stores across the UK.