Asda and EG poised to agree £10bn merger - report

Asda is set to announce a £10bn merger with sister business EG Group, the petrol stations giant, it was reported on Friday.

According to Sky News, and widely reported elsewhere, the supermarket chain is finalising a deal which would see it join forces with EG in the UK and Ireland and step up plans to focus on convenience retailing. Both companies are owned by billionaire brothers Mohsin and Zuber Issa and private equity firm TDR Capital, and have the same chair, former Marks & Spencer chief executive Stuart Rose.

It is understood that Asda will pay around £3bn for EG, which will be partially funded through £500m of debt provided by US firm Apollo Global Management.

The tie-up, which Sky said could be announced as early as Friday, would create a company with 170,000 employees, nearly 600 supermarkets, 700 petrol forecourts and 100 convenience stories. Annual revenues would be around £30bn.

It is unlikely, however, to face opposition from the competition watchdog. The Competition and Markets Authority reviewed the two companies when the Issa brothers acquired Asda in 2020 for £6.8bn, and already considers them one business because of the shared ownership.

A deal would also help EG with its significant debt pile, £7bn of which is due to be repaid in 2025.

Neither Asda nor EG have commented on the reports.