Walmart sells its Europe outpost Asda to Issa billionaire brothers for US$7.97bn

EUROPE – Walmart has sold its last major outpost in Europe, Asda, to two billionaire brothers from Blackburn and the private equity firm TDR Capital in a deal that values the supermarket chain at £6.8 billion (US$7.97bn).

Asda confirmed the sale of majority stake in Asda to Mohsin and Zuber Issa, who made their fortunes building the EG Group petrol station empire, and TDR.

Walmart said that, under the new owners, Asda will invest £1 billion (US$2.5 billion) in the supermarket over the next three years. This means that the grocer will return to majority UK ownership for the first time in two decades.

TDR Capital now owns half of the group, with Zuber Issa controlling 25% and Mohsin Issa the remaining 25%. Walmart said it expected to report a US$2.5 billion (£1.9bn) loss for its next financial year “reflecting the absence of net income associated with the Asda business”. It added that the “use of cash proceeds” from the sale “will be determined at a later date”.

“Asda has been a powerhouse of innovation for the rest of the Walmart world, and we look forward to continuing to learn from them in the future,”

Judith McKenna – head Walmart international business

The Issa brothers own EG Group, which has more than 5,200 petrol stations across the UK and Europe.

The auction process for Asda has lasted for several months. Walmart decided to sell a controlling stake in Asda after shelving plans to float the business following a failed £7.3 billion (US$8.55bn) merger with Sainsbury’s, which was blocked on competition grounds.

Announcing the deal, Walmart said Asda would keep its headquarters in Leeds and its chief executive, Roger Burnley, would remain in place. Asda already has a relationship with the Issa brothers through their petrol forecourt business.

The supermarket recently announced its expansion into convenience stores and will initially trial “Asda On the Move” at three of EG Group’s fuel station forecourts in the Midlands.

Mohsin and Zuber Issa said they wanted to support Asda’s management to achieve long-term growth.

“We believe that our experience with EG Group, including our expertise around convenience and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy,” they said.

Walmart will remain a strategic partner, according to Judith McKenna, head of the US company’s international business. “Asda has been a powerhouse of innovation for the rest of the Walmart world, and we look forward to continuing to learn from them in the future,” she said.

The sale comes more than a year after antitrust regulators blocked the US retail giant’s plans to merge Asda with UK rival Sainsbury. (JSAIY)

Asda has more than 600 stores across the United Kingdom and 18 gas stations, according to Walmart. It employs more than 145,000 people and serves more than 18 million customers each week.

Online grocery sales have soared in Britain since coronavirus lockdowns were introduced in March, and Asda has benefited from that trend. The group doubled its online operations during the pandemic, Walmart said.

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Walmart bought Asda in 1999 for £6.7 billion (US$7.85bn) and it will retain a minority stake in the supermarket chain.

It has been trying to offload the company since at least 2018, following an exit from Germany, its other major outpost in Europe, in 2006.

Its plans to merge Asda with Sainsbury’s in a deal valued at US$10 billion were derailed by regulators who said it would be bad for consumers and lead to higher prices.

Charlie O’Shea, senior credit officer at Moody’s, said the deal will allow Walmart to focus on international markets with more “long-term upside,” such as India and China.

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