ASDA, EG Group reportedly considering £13B merger deal

ASDA and EG Group are reportedly exploring a merger deal worth £13 billion. The British supermarket chain and retailer that also operate filling stations may team up to expand their businesses further in the U.K.

The possible merger between ASDA and the EG Group was first reported the past weekend by a local British newspaper. As per Reuters, the partnership of the two major brands will definitely create a retail giant that could value between £11 billion and £13 billion, which is about $13.6 billion to $16.1 billion in US dollars.

Together, the companies will also have more than 581 supermarket locations, 100 convenience stores, and 700 petrol forecourts across Britain. It was mentioned that TDR Capital, a London-based private equity group, co-owns EG Group with brothers Zuber and Mohsin Issa. They acquired ASDA from Walmart Inc. in late 2020 in a deal valued at £6.8 billion. At any rate, it was said that the talks of consolidating ASDA and EG Group emerge ahead of a refinancing of the latter, which has £7 billion debt due in 2025.

Meanwhile, the competition regulator in the region has already started reviewing ASDA stores' purchase of the co-operative group's petrol forecourt estate, and the Competition and Markets Authority (CMA) is set to release its phase 1 decision on or before March 14. This will determine if the merger deal will diminish competition in the United Kingdom.

At this time, the competition watchdog’s view is still not clear but things will become clearer as the regulator has already launched an inquiry into the supermarket chain’s purchase of the Co-op’s forecourt sites. It was in October 2022 when the company bought 129 of the Co-op’s petrol forecourt locations which is five percent of the Co-op’s retail estate of 2,564 stores. The deal is worth £611 million.

Finally, regardless of the final decision in the merger with the EG Group, European Supermarket Magazine reported that ASDA is planning to launch 300 convenience stores by the last quarter of 2026 with the goal of becoming a major player in the smaller shop market. The supermarket chain is hoping that this move will help drive growth while also generating thousands of new jobs along the way.

Photo by: David Smith/Wikimedia Commons (CC BY-SA 2.0)