Asda vowed to cut prices after a £6.8billion takeover by two brothers from Blackburn took it back into British hands after two decades of American ownership.
The UK’s third biggest supermarket chain, which was bought by Walmart in 1999, has been sold to a consortium led by Zuber and Mohsin Issa backed by private equity group TDR Capital.
The deal comes 18 months after the collapse of a planned merger between Asda and Sainsbury’s.
The UK’s third biggest supermarket chain, which was bought by Walmart in 1999, has been sold to a consortium led by Zuber and Mohsin Issa backed by private equity group TDR Capital
Asda chief executive Roger Burnley, who will stay in the job, said: ‘Great products and great prices are in our DNA. We wake up every day working out how we can cut prices on our products.’
The Issa brothers own EG Group, which they built from a single petrol station in Bury in 2001 to a global juggernaut with more than 6,000 sites around the world and an annual turnover of £20billion.
Last night the brothers were hailed as a ‘great British success story’ who will bring ‘entrepreneurial flair’ to Asda.
Bosses said customers can expect to see a major expansion in the number of convenience stores, including into EG’s 340 UK petrol stations.
Asda finance chief Rob McWilliam said: ‘The Issas have tremendous experience in convenience retail – they’ve made it profitable and scaled it from one outlet to 6,000.
‘We expect to learn a lot from them. Our core strategy is to lower prices and bring those low prices to more customers.’
The sale is the latest example of a private equity firm swooping on British firms whose ‘bargain basement’ valuations have been depressed by Brexit and the coronavirus pandemic.
Bain Capital is in taken pole position to buy insurer LV, entering exclusive talks yesterday ahead of Royal London.
Earlier this week security group G4S had to face down a £3billion bid by Canada’s Garda World, backed by BC Capital.
Asda chief executive Roger Burnley will stay in his job and Walmart will retain a minority stake and a seat on the board as part of the agreement.
The American supermarket group has been looking to sell most of its Asda stake to focus on defending its position in the US against Amazon.
It is thought Walmart was wooed by the Issas’ entrepreneurial flair and the growth potential from expanding Asda convenience stores.
Two other private equity bids led by former Debenhams boss Rob Templeman and former Asda executive Paul Mason were both rejected in the lengthy auction process, which began in February.
The deal is a crowning glory for the Issas, who have started their petrol station empire when they bought a single garage in Bury for £150,000 in 2001.
They now operate more than 6,000 petrol stations and convenience stores across three continents and employ 33,000 staff.
The brothers grew up in a two-bedroom terrace in Blackburn after their father arrived from India ‘with nothing’ to work in the garment trade. Their fortune is now valued at £3.56billion.
Speaking after securing the Asda deal yesterday, Mohsin, 49, and Zuber, 48, said they were ‘proud to be investing in Asda, an iconic British business that we have admired for many years’.
Last night Lord Haskins, former chairman of Northern Foods, said: ‘They’re not fools. But Asda has been trading quite badly for many years – so good luck to them. It’s a gamble.’
Independent retail expert Richard Hyman said: ‘I think it’s a good deal. Retail has become so corporate. These guys are self-made entrepreneurs.’