Forecourt owners take over ASDA
Billionaire brothers who started out as joint owners of a forecourt have taken over ASDA, as part of a £6.8 bn consortium.
The success of the bid by Mohsin and Zuber Issa and their private equity partner TDR Capital returns the 71-year-old firm to UK ownership after 21 years. ASDA was originally founded in 1949 by the Asquith family when it merged its retail business with Associated Dairies in Yorkshire.
Now the Blackburn based Issa brothers and TDR Capital are acquiring a majority ownership stake in Asda. Walmart will retain an equity investment in the business, with an ongoing commercial relationship and a seat on the board.
The brothers have a successful background in convenience retailing and last month, ASDA announced plans for a new convenience wing called ‘Asda on the move’.
In a statement Mohsin and Zuber Issa said: “We are very proud to be investing in Asda, an iconic British business that we have admired for many years. Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on. Asda’s performance through the Covid-19 pandemic has demonstrated the fundamental strength and resilience of the business, and we are excited to support Roger and his team as they continue to reposition the business to drive 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. After a successful period as part of Walmart we are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the UK.”
The deal, worth almost £7 billion which is subject to approval from the Competition and Markets Authority. A previous merger of Sainsburys and ASDA was blocked in 2019 by the CMA.
The Issa brothers started their business empire cleaning toilets in their parents petrol station. They had an idea to transform the filling station into a “shopping destination”.
Their petrol station empire has since expanded to nearly 6,000 forecourts across 10 countries. It has turned the brothers into billionaires and gave them leverage to take control of the vast Asda supermarket chain.
In their teens, the brothers recognised there was little profit to be made from just selling fuel, but that on the forecourt they had a captive market of motorists with little to choose from beyond sweets, crisps and sandwiches.
The brothers, now 48 and 49, saved £150,000 which allowed them to buy their own forecourt in Bury, Greater Manchester, to test their idea of offering a wide range of fresh food and snacks.
Their timing was perfect, with the big oil companies trying to offload their forecourts. The brothers took on more petrol stations and installed branches of Spar, Carrefour and other supermarket chains alongside Subway outlets, Burger King, Greggs and KFC. In 2010, the brothers’ EG Group opened the UK’s first Starbucks drive-through. They now operate 110 Starbucks stores, and are the largest franchise operator of KFC in the UK, with 125 outlets.
Asda currently employs around 4,000 staff in Northern Ireland across 17 stores, including an Asda Living store in Belfast city centre.
Last month, NR ran a story regarding ASDA’s plans to enter the convenience market through a trial with forecourt operator EG Group it was announced on September 21. Asda will brand its convenience wing as ‘Asda On the Move’.