A deal worth more than £2bn which will see Asda acquire the majority of EG Group’s UK and Ireland operations has been confirmed.

Both companies are owned by the billionaire Issa brothers and private equity giant TDR Capital. Asda is to buy most of Blackburn-headquartered EG Group’s fuel, foodservice, grocery and merchandise business for £2.27 billion in a deal first reported back in January.

EG Group, which includes Euro Garages, Cooplands and Leon, said the proceeds, together with the net proceeds of $1.4bn from the recent sale and lease back transaction in the US, will be used to repay debt. 

EG Group will continue to operate in the USA, Australia, Germany, France, Italy, the Netherlands, Luxembourg and Belgium, while also retaining around 30 UK sites including the first Euro Garages site in Bury which is close to the group headquarters.

The Cooplands bakery business and certain other foodservice brands will also be retained.

After the deal is completed, the group said it will generate over $25bn of annual revenue and more than $1bn of EBITDA, across 5,500 locations.

The Waterside offices in Blackburn will remain as the global headquarters and shared service centre for the group. The transaction is expected to complete in the fourth quarter of 2023.

Zuber Issa, co-founder and co-CEO of EG Group, said: “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.

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.”

He added:”I am confident the UK&I business will go from strength to strength under Asda’s ownership. Over the last 22 years we have built a business that I am extremely proud of, and EG Group will continue to maintain an important base in the UK, supporting the global business from our home in Blackburn.

I want to thank all of our colleagues, across the business, for their hard work and dedication over the years, and we now look forward to continuing to develop and execute our successful strategy.”

Mohsin Issa said: “Asda is committed to saving customers precious time and money across their shopping baskets and on the forecourt. The combination of Asda and EG UK&I will be positive news for motorists, as we will be able to bring Asda’s highly competitive fuel offer to even more customers.

I would like to sincerely thank all colleagues at both businesses for their ongoing efforts to serve our customers during tough economic times, and I look forward to welcoming our new colleagues from EG UK & I and expanding the Asda family further.”

Stuart Rose, chairman of EG Group and Asda, added: “Zuber and Mohsin Issa have spent the last two decades creating the best convenience retailing business in the UK.

Their journey from one site to creating a global business has been extraordinary and reflects their vision, and ability to be a genuine disruptor in the forecourts market, turning these locations into destinations in their own right with food, coffee and convenience. 

Following this deal, they will remain in nine countries, with an even stronger business, which is able to focus on international growth.”

Gary Lindsay, managing partner at TDR Capital, said: “The sale of the EG UK&I business to Asda makes strategic sense for both parties and will enable EG Group to accelerate its growth in key markets including Europe, the US and Australia.

“The group has developed a successful blueprint in the UK for developing one-stop shop sites which combine convenience retail, fuel and foodservice and there are significant value creation opportunities from rolling out this model, across the global estate.

“The group remains at the leading edge of developing the forecourts of the future, and its ongoing development of alternative fuels and EV charging infrastructure.”

Both EG Group and Asda are chaired by former Marks & Spencer and Ocado Group chair Lord Rose.

The Issa brothers acquired Asda in a £6.8bn deal alongside private equity firm TDR Capital in 2021. If the merger is completed, the combined group would have 170,000 employees and turn over almost £30bn.

According to the latest Sunday Times Rich List, the brothers saw their wealth rise by £302m to £5.05bn over the last year. In March it was reported that profits at EG Group, which the brothers also own alongside TDR Capital, increased to almost $1.5bn during 2022.

EG Group posted an EBITDA of $1.46bn on a constant currency basis, up by 1.9% compared to 2021. The group’s turnover also jumped by 25.1% to $33.04bn thanks to the contribution of acquisitions such as Cooplands.

However, the GMB union has called for the merger to be looked at by the Competition and Markets Authority.

National officer Nadine Houghton said: “We are concerned rising interest rates will leave the debt of the UK’s third largest retailer unsustainable. More than 7,000 ASDA colleagues are already facing hire and rehire – this slashing of terms and conditions is just the tip of the iceberg.

GMB’s priority is to protect and improve our members’ jobs and conditions and we believe this merger makes that harder.”