A Leon store in London | Photo credit: Greg Jeanneau

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UK-based petrol station forecourt business EG Group has reached an agreement to acquire food-to-go and coffee chain, Leon. According to reports, EG Group, which is controlled by entrepreneur siblings Mohsin and Zuber Issa, has paid £80m-100m ($111m-139m) to take control of Leon’s 42 company-owned and 29 franchise sites. The majority of Leon’s stores are located in the UK, with additional sites in Europe across the Netherlands, Spain, Norway and Switzerland.
 
Like many food-focused café chains, Leon’s business has been severely disrupted by the loss of commuter and office worker trade during the Covid-19 pandemic. In September 2020 the health-focused brand launched a coffee subscription service in a bid to adapt to new customer routines and the rise of home working. It has also sought to supplement revenues lost due to Covid-19 by selling a branded ready meals and condiments in UK supermarkets.
 
However, with lockdown restrictions gradually easing and operators looking towards healthier trading in the net 12 months, EG Group said it planned to open around 20 Leon outlets a year from 2022.
 
EG Group operates a portfolio of more than 6,000 petrol station sites around the world, including 700 in the UK and Ireland with licensed branches of prominent brands including Starbucks, KFC and Greggs.
 
In February 2020, EG Group made headlines after acquiring UK supermarket Asda from US retail giant Walmart in a deal valued at £6.8bn ($9.4bn). It later turned its attention to acquiring UK coffee chain Caffè Nero, a move strongly resisted by the latter as it attempted to shore up its business in the wake of severe Covid-19 trading disruption.
 
World Coffee Portal data shows Caffè Nero closed net 16 of its UK sites in 2020 and currently operates some 648 stores in its flagship market, with additional stores located in the US and Europe.
 
In November 2020, Caffè Nero rejected a bid by EG Group to take control of the company and entered into a company voluntary arrangement (CVA) deal in order to restructure debt and renegotiate rents.
 
However, indicating EG Group is still vying to take control of Caffè Nero, the Sunday Telegraph recently reported the Issa brothers had purchased around £140m of the coffee chain’s debt from Swiss private equity firm Partners Group via investment bank Morgan Stanley, a move that will pile significant pressure on Caffè Nero as it continues to rebalance its finances.