Asda said the transaction will create a group with expected combined revenues of nearly £28bn ($34bn) | Photo credit: Asda

UK supermarket chain Asda has taken full ownership of LEON’s 78 UK stores, as well as 462 licensed Greggs, Burger King and Subway outlets, after acquiring the majority of EG Group’s UK business.   
 

The deal, first announced in May 2023, completed on 31 October 2023 for an enterprise value of £2.07bn ($2.5bn). 

Under the terms of the transaction, EG Group will retain ownership of its Cooplands bakery chain, which it acquired in October 2021, as well licensed stores of Starbucks, KFC, Sbarro, Chaiiwala and Cinnabon. 

Asda and petrol forecourt operator EG Group are both owned by the UK-based brothers Mohsin and Zuber Issa and private equity group TDR Capital. EG Group will use proceeds from the deal to pay down some of its loans that are due to be repaid by 2025 and extend $3.2bn of loans to February 2028.

The Asda deal, refinancing and a sale and leaseback deal in the US earlier this year will enable it reduce debts from approximately $9.6bn to $4.2bn.
 

Leeds-based Asda opened a LEON coffee-to-go kiosk within its Milton Keynes store in late 2021 and began selling LEON’s packaged retail coffee across 385 of its stores last year. The business said it will explore further opportunities to introduce LEON across its 640-store estate. 

The supermarket chain said the transaction accelerates its growth in the convenience and foodservice industries and will create a group with expected combined revenues of nearly £28bn ($34bn). 

Additionally, the acquisition will enable Asda to scale its convenience-focused Asda Express network across EG Group’s 356 predominantly freehold sites – which include modern convenience stores on petrol forecourts. 

Asda’s current Express footprint comprises three stand-alone stores and 119 petrol forecourt sites acquired from the Co-op Group in 2022, which Leeds-based Asda began converting to its Express fascia last month. The supermarket chain plans to open a further 300 stand-alone convenience stores by the end of 2026.  

“As families continue to face into cost-of-living challenges, bringing Asda’s long-standing value in groceries and fuel to even more communities is a win for UK consumers. The combination of Asda and EG UK will only create more opportunities for Asda to bring that focus on value to even more communities – as well as driving the sustainable growth of the business through a convenience offer of genuine scale and substance,” said Lord Stuart Rose, Chair of Asda. 

In a separate press release, EG Group said the proceeds of the sale will also facilitate its ongoing international expansion in the US, Australia, Germany, France, Italy, the Netherlands, Luxembourg and Belgium.