Asda, EG Group Terminate $1 Billion Deal for Gas Stations

(Bloomberg) -- EG Group, the gas station operator whose owners bought Asda from Walmart Inc., has called off plans to purchase the U.K. supermarket chain’s petrol forecourt business.  

EG Group and Asda terminated the planned 750-million-pound ($1 billion) sale after the sharing of commercial information, the companies said in emailed statements Monday. 

The Issa brothers, a sibling duo behind EG Group, and TDR Capital struck a deal with Walmart in October 2020 to take control of Asda in a 6.8 billion pound transaction. EG then separately agreed to buy Asda’s petrol filling stations, car washes and ancillary land in February, though antitrust rules meant the companies weren’t able to share commercial information until June.

The new information “resulted in several changes to the financial evaluation of the proposed transaction,” the companies said. “As a result, EG and Asda have decided they will no longer proceed with the transaction.”

News that the deal is off could come as a surprise to the market as the filling-station transaction was a key part of funding the larger debt-fueled acquisition of Asda. 

EG Group, which is backed by TDR Capital, is one of the world’s largest independent gas-station and convenience-store chains and has grown rapidly through a series of acquisitions in the past few years. The company now has around 6,000 sites spread across countries including the U.K., U.S., France, Italy, the Netherlands and Australia. 

In recent years EG Group has placed more focus on the higher-margin convenience store side of its operations, along with takeaway food, as the volume of fuel sales declines globally. 

EG Group said it will now redeem a 675 million pound bond that it had issued to finance the proposed gas station deal. The company added it will continue to work closely with Britain’s third-largest grocer with plans to roll out more Asda On The Move convenience stores across its forecourts. 

Asda’s management said it will settle the forecourts bridge facility through a combination of 250 million pounds cash and new long-term debt of 500 million pounds. 

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