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UK’s Asda says TDR Capital to become majority owner
Global Banking & Finance Review®
Company
By James Davey
LONDON (Reuters) – Britain’s Asda said on Friday that private equity firm TDR Capital will gain majority ownership of the supermarket group by acquiring Zuber Issa’s share in the business, which is still 10% owned by U.S. giant Walmart Inc.
Buying Zuber Issa’s 22.5% stake will give TDR 67.5%, with 22.5% still owned by his brother Mohsin. Asda said the transaction is set to complete in the third quarter of 2024.
Asda, the UK’s third largest grocer after Tesco and Sainsbury’s, has been burdened by debt since the Issas and TDR bought 90% of it from Walmart in a 6.8 billion pound ($8.7 billion) deal that completed in 2021.
Last month, Asda reported a slowdown in quarterly sales growth and an underperformance versus its bigger rivals. Monthly industry data has shown Asda losing market share. It ended its first quarter with net debt of 3.8 billion pounds.
Asda’s strategy has focused on growing its convenience store business, a new customer loyalty scheme and matching the prices of discounters Aldi and Lidl on key items.
“We will continue to work closely with the Asda management team and colleagues across the business to support the ambitious strategy,” TDR managing partners Gary Lindsay and Tom Mitchell said in a statement.
Asda, which has been without a CEO since Roger Burnley left abruptly in 2021, said on Friday it was undertaking an “extensive international executive search” to find one.
Last October, Asda completed the acquisition of the majority of EG Group’s UK & Ireland petrol forecourt business for an enterprise value of 2.07 billion pounds.
EG Group, which is also owned by TDR and the Issas, said on Friday it would sell its remaining UK forecourt business to Zuber Issa for 228 million pounds.
On completion, Zuber Issa will step down as co-CEO of EG Group and become a non-executive director, leaving Mohsin Issa as sole CEO.
There have been media reports of a rift between the brothers. However, Mohsin Issa said he would continue to work with Zuber on their personal co-investments, family office philanthropy and Issa Foundation projects.
EG Group also reported a 9% increase in first quarter underlying EBITDA to $178 million.
($1 = 0.7813 pounds)
(Reporting by James Davey, editing by Paul Sandle and Alexander Smith)
Private equity refers to investment funds that buy and restructure companies not listed on public exchanges, aiming for long-term growth and profitability.
Market share is the percentage of an industry's sales that a particular company controls, indicating its competitiveness and market position.
A loyalty scheme is a marketing strategy designed to encourage customers to continue buying from a business by offering rewards or discounts.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, and is a measure of a company's overall financial performance.
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