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Billionaire Issa brothers complete £6.8bn Asda takeover

Wednesday 17th February, 2021

BBC News has reported that the Issa brothers, two entrepreneurs from Blackburn who made billion-pound fortunes running petrol stations, have completed the deal to buy Britain's third-largest supermarket chain.



Asda was valued at £6.8bn, but the brothers and the investment firm TDR Capital paid just £780m in a leveraged buyout - which means that it involves large amounts of debt.

TDR Capital specialises in this kind of deal and is also co-owner of EG Group, the worldwide petrol station business which built the brothers' fortune, and which also has large borrowings.

The Issas and TDR each contribute half of the £780m in cash to Asda's former owners, Wal-Mart, which has owned Asda since 1999.

Most of the purchase price - just under £4bn - will be borrowed.

Walmart, the American supermarket which owned Asda for the past 21 years, will retain a small stake in Asda, for £500m, along with a seat on Asda's board.

Then the new owners will sell off parts of Asda to raise the rest of the purchase price.

Asda will sell its warehouses and distribution system for £950m. It will still use them, but in future, it will have to pay rent to their new owners.

And Asda's 323 petrol stations will be sold for £750m to EG Group, adding to the portfolio of more than 6,000 around the world.

The deal is still awaiting approval from the Competition and Markets Authority, which is expected by the summer.

 

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