Billionaire Asda owners buy 129 Co-op fuel stations in £600M deal: Issa brothers who made their fortune from running petrol forecourts in Europe add dozens of garages to their empire
- The Issa brothers have secured a deal to buy the Co-op Group’s petrol stations
- The billionaire brothers own Asda, which runs 320 petrol stations across the UK
- The deal frees up cash for the Co-op Group, which recently cut 400 jobs
The billionaire Issa brothers who own Asda have agreed to buy the Co-op group’s petrol stations for £600 million.
The sale will see 5 per cent of Co-op’s entire retail estate – including 129 petrol stations and three development sites – handed over to Asda, which already runs 323 petrol stations across the UK.
Brothers Mohsin and Zuber Issa saw off a number of rival bids to seal the deal, reportedly increasing their offer from £450 million to £600 million.
Co-op, known for its supermarket chains and funeral care operations, said that offloading its petrol forecourts will allow it to focus on its convenience business as well as raising important cash for the business.
For Asda, the move is part of its plans to become ‘the UK’s second largest supermarket’ and to move further into the country’s convenience store market.
Asda will pay £438 million in cash and take on around £162 million of lease liabilities as part of the deal, with the final amount set to be confirmed on completion later this year.
Billionaire Issa brothers, who own Asda, have bought the Co-Op’s petrol stations for £600 million
The deal is expected to free up cash for the Co-op, which last month announced it would cut around 400 jobs in the face of tough trading conditions worsened by rising inflation
Asda — which runs 320 petrol stations across the UK — was taken over by the Issa brothers and TDR Capital last year.
Issa Brothers and TDR Capital also own EG Group, one of Europe’s largest independent fuel retailers.
The Co-op’s 129 petrol stations now move into Asda’s hands and will be more closely tied up with the UK’s food retailing market.
The deal also frees up cash for the convenience chain, which last month announced it would cut around 400 jobs in the face of tough trading conditions worsened by rising inflation.
The cash will go towards funding new convenience stores in the heart of more communities, and reducing its net debt, the Co-op said.
Asda — which runs 320 petrol stations across the UK — was taken over by the Issa Brothers and TDR Capital last year
Around 2,300 Co-op staff who work across the sites being sold will transfer over to Asda once the deal is complete. The Co-op has a total workforce of about 63,000 people.
Co-op Group — which owns supermarket chains and funeral care operations — has offloaded a number of its divisions over the past decade, including its chain of pharmacies and travel shops.
In April, the firm revealed that its annual profits were slashed in half following supply chain disruption and higher costs.
Shirine Khoury-Haq, Co-op’s newly-appointed chief executive, said: ‘This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of co-operating for a fairer world while building our core leading convenience business.’
Mohsin Issa, co-owner of Asda, said: ‘We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the UK.
‘We see convenience as a significant growth opportunity for the business.
‘This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second-largest supermarket.
The sale is due to complete in the final three months of 2022.
In May, the Issa brothers lodged last-minute bids to take control of the collapsed corner shop chain McColl’s, but lost to Morrisons
The billionaire Issa brothers’ petrol garage starting point in Bury
Brothers Mohsin and Zuber Issa founded EG Group, one of Europe’s largest independent fuel retailers.
The company began as one petrol station that the brothers ran in Bury, Greater Manchester.
It then became Euro Garages, with locations across the UK, before private equity giant TDR Capital came onboard.
The business then became EG group, and expanded into Europe.
The EG Group has acquired brands including Cooplands, Cumberland Farms, Go Fresh, Leon and Loaf ‘N Jug.
The Issa brothers separately bought supermarket giant Asda with TDR Capital.
Earlier this year, the brothers lost out on bids to acquire corner shop chain McColl’s, and the Walgreens Boots Alliance.
In June, the US owner of pharmacy chain Boots has abandoned its plans to sell the UK high street chemist despite interest from the Issa brothers.
Walgreens Boots Alliance decided to keep both the pharmacy chain – which has 2,260 stores in the UK and employs around 55,000 – and the No7 beauty brand after ‘market instability’ put a stop to its plans to sell.
The 172-year-old feature of British high streets merged with Walgreens through deals in 2012 and 2014 and was valued at about £9 billion at the time.
It was set for a sale of £5billion after a bid by Indian billionaire Mukesh Ambani through a consortium of Apollo Global Management and Reliance Industries.
However there were other takeover approaches from the Issa brothers’ Mohsin, and Zuber — who promised to invest £1billion to improve Asda since buying that business.
In May, the Issa brothers lodged last-minute bids to take control of the collapsed corner shop chain McColl’s.
But Morrisons won the battle to take over, securing the future of 16,000 jobs and 1,100 shops.
The supermarket giant fended off competition from the billionaire brothers, after a takeover tussle.
McColl’s lenders initially rejected an offer from Morrisons that would have seen it take on the firm’s debts and repay them over time.
But the supermarket chain returned with an improved deal that would see the lenders repaid in full immediately, satisfying one of McColl’s key demands.
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