The EG Group and TDR Capital acquire Asda from Walmart

December 2020 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

December 2020 Issue

At a time of evolution in the UK food retail sector, global convenience and forecourts retailer the EG Group and UK-based private equity firm TDR Capital LLP are to acquire Asda Group Limited from Walmart Inc. in a deal valued at £6.8bn.

Under the new ownership structure, TDR Capital and the EG Group, which was founded by and is co-owned by the Issa brothers, are acquiring a majority ownership stake in Asda. Walmart will retain an equity investment in the business, with an ongoing commercial relationship and a seat on the board.

“We believe this deal creates the right ownership structure for Asda, building on its 71 year-heritage, while bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing,” said Judith McKenna, president and chief executive of Walmart. “I am delighted that Walmart will retain a significant financial stake, a board seat and will continue as a strategic partner.”

Furthermore, the new owners intend to continue to build a strong and successful business, benefiting from fresh capital and expertise, as well as valuable links with Walmart, the world’s largest retailer. Additionally, the Issa brothers, backed by TDR Capital, will support and accelerate Asda’s existing strategy, which is anchored in delivering low prices and convenience to customers.

“This new ownership opens an exciting new chapter in Asda’s long heritage of delivering great value for UK shoppers,” said Roger Burnley, chief executive of Asda. “With our combined investment, expertise and ambition, Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers, as well as strengthen our business for colleagues.”

As well as accelerating Asda’s existing strategy, the Issa brothers will bring significant additional expertise, particularly in convenience retail and brand partnerships, drawing on their experience of building a global convenience retailer with more than 6000 sites. Through these and other initiatives, the Asda leadership team and the company’s new ownership will be focused on building a differentiated operating model that will drive competitive outperformance and long-term growth.

“We are very proud to be investing in Asda, an iconic British business that we have admired for many years,” said Mohsin and Zuber Issa. “Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on. Asda’s performance through the coronavirus (COVID-19) pandemic has demonstrated the fundamental strength and resilience of the business, and we are excited to support Mr Burnley and his team as they continue to reposition the business to drive long-term growth.”

Following completion of the transaction, Asda will remain headquartered in Leeds, from where it built its heritage and roots, and will continue to be a significant contributor to the UK economy and tax base. The business will continue to be led by Mr Burnley who will form part of Asda’s board alongside representatives appointed by the Issa brothers, TDR Capital and Walmart.

The transaction is subject to regulatory approvals and is expected to complete in H1 2021.

Mr Burnley concluded: “In a constantly changing retailing environment, our new ownership will further enhance our resilience, while creating significant, additional opportunities to drive growth.”

Fraser Tennant