Asda and EG Group, the owners of petrol stations, are finalising a merger of their operations in the UK worth £10 billion.

Billionaire brothers Mohsin and Zuber Issa, founders of EG Group, along with TDR Capital, are expected to announce the merger on Friday.

The combined entity, known as Asda and EG UK, will become a major player with around 170,000 employees and annual revenues close to £30 billion.

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It will operate nearly 600 supermarkets, 700 petrol forecourts, and 100 convenience stores, serving over 20 million customers weekly.

Lord Rose of Monewden, former chairman of Marks & Spencer and Ocado Group and current chairman of both Asda and EG, will oversee the biggest deal in his career.

The merger is anticipated to expedite Asda’s expansion into the convenience store sector, an area where it has been comparatively slow to expand into compared to rival companies.

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Apollo Global Management is expected to provide over £500 million in private placement debt to finance the deal.

Apollo was a prominent contender in the 2020 sale of Asda by Walmart, the American retail giant after the proposed merger between Asda and Sainsbury’s was blocked by the Competition and Markets Authority.

Talks between Asda and EG UK have been ongoing for over six months, with reports of potential synergies exceeding £100 million between the two businesses.

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The financing for the transaction is likely to involve Barclays and HSBC as lenders, with Barclays also providing advisory services alongside Rothschild.

The merger will be structured as Asda acquiring EG UK for approximately £1.25 billion, establishing it as one of the UK’s largest private-sector employers.

Despite the consolidation, there are no significant redundancies expected, as EG will maintain its headquarters in Blackburn, Lancashire, and Asda will continue to be based in Leeds, Yorkshire.

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Competition regulators have previously examined the implications of Asda and EG being under the control of the same shareholders when the supermarket chain was acquired for £6.8 billion.

Asda’s recently acquired 130 petrol stations from the Co-op Group for approximately £600 million. Due to competition concerns 13 sites were removed at the time of the merger

As of now, no official comments have been provided by Asda or EG.

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