Mergers & Acquisitions

EG Group, Asda Mulling Merger?

Issas contemplating combining global c-store empire with grocery acquisition
eg group asda

BLACKBURN, U.K. — The founders of global convenience-store company EG Group and owners of U.K. grocer Asda Group are considering merging the two companies, according to a Bloomberg report citing people with knowledge of the matter.

Founded in 2001 by the Issa Family, Blackburn, U.K.-based EG Group is a gasoline forecourt and retail convenience operator with more than 6,200 sites across the United Kingdom and Ireland, Europe, the United States and Australia. In 2018, EG Group established itself in The United States as EG America by acquiring Kroger’s 762-site c-store network. Also in 2018, it acquired 225 Minit Mart c-stores from TravelCenters of America, Westlake, Ohio. Among other acquisitions, in 2019, EG Group also acquired Cumberland Farms, Westborough, Mass., and its nearly 660 c-stores in the Northeast and Florida.

  • EG America is No. 5 on CSP’s2021 Top 202 list of U.S. c-store chains by number of retail outlets.

Co-CEOs Moshin and Zuber Issa are studying a range of strategic alternatives for EG Group, which they own with London-based private-equity firmTDR Capital, the people said. A merger with Asda could value the combined business at around $35 billion including debt, the report said.

TDR and the Issas in February acquired control of Asda, Walmart’s wholly owned U.K. retail supermarket business, in a deal valued at approximately $9 billion. They own the business separately from EG Group, and Walmart still holds a minority stake in the supermarket chain. Asda and EG Group have been stepping up their cooperation in recent months, drawing up plans to expand foodservice at Asda locations and roll out Asda On the Move c-stores across EG Group gas stations, said the report.

A deal would give EG Group greater bargaining power with suppliers and further scale to compete with companies like Alimentation Couche-Tard, Laval, Quebec, the $40 billion owner of the Circle K c-store chain, Bloomberg said. Couche-Tardis No. 2 on CSP's 2021 Top 202 list. EG Group's strategy of expanding globally through acquisitions has seen it go head-to-head with Couche-Tard in the bidding for some convenience assets.

There are a number of hurdles to a potential merger with Asda, and EG Group's owners could decide to pursue other options for the business, the people said. They have also been weighing other options including a sale of their Australian retail gas and convenience assets or a public listing of the global gas station operations, according to the report.

In September, Bloomberg reported that EG Group was working with advisers including Rothschild & Co., Goldman Sachs Group, Morgan Stanley and Barclays to weigh strategic alternatives, including a potential sale, citing people familiar with the matter. EG Group alone could be valued at about $15 billion, the sources said.

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