Union's fears after multi-million pound Asda petrol station deal collapses
Union bosses have appealed for reassurance for thousands of Asda workers after a multi-million pound deal fell through from Lancashire entrepreneurs Zuber and Mohsin Issa.
The billionaire brothers from Blackburn who took over Asda earlier this year have abandoned a £750m plan to fold the company’s petrol forecourts into their filling station empire.
Asda and the EG Group said they had decided to terminate the deal on Monday after new information came to light.
The deal was first agreed in February, but it was not until June that the two companies could start sharing commercial information.
Neither side revealed what had caused the change of heart, but said that something in this information had sparked a rethink.
“This allowed Asda and EG Group’s teams to start sharing commercial information relating to EG’s acquisition of the Asda forecourt business which had not been previously possible and has resulted in several changes to the financial evaluation of the proposed transaction,” Asda and EG said.
“As a result, EG and Asda have decided they will no longer proceed with the transaction.”
Although there was no suggestion the failure might badly affect the supermarket, GMB, the union for Asda workers, has called for an urgent meeting with the Issa Brothers over reports the company is planning to take on half a billion pounds in extra debt and stump up about £250m of its own cash after plans to sell Asda's petrol stations collapsed.
Nadine Houghton, GMB National Officer, said: “Reports Asda is to take on half a billion pounds worth of debt are extremely worrying.
“Asda workers have been through the grinder during the past couple of years; from attacks to their terms and conditions, the failed Sainsbury’s merger and the takeover.
“The deserve some stability and the Issa Brothers need to reassure them about the long-term future of the profit-making supermarket they have acquired.”
The Issa brothers, Zuber and Mohsin, made their money through the EG Group, a petrol station business that has 6,000 sites in the UK and Europe.
They were catapulted into the public eye last year after launching, and later winning, a £6.8 billion takeover of Asda.
They teamed up with private equity firm TDR Capital to buy the retailer from US giant Walmart.
The deal that would have seen Asda’s forecourts bought by EG Group was cancelled on Monday, but the two companies still plan to work together.
Asda’s on the move range will be rolled out across EG’s forecourts in the UK.
It will establish 28 new Asda convenience stores at EG’s forecourts this year, and reach 200 next year.
EG said: “These plans remain unchanged, and the company continues to anticipate synergies as a result of its growing relationship with Asda.”
Asda added: “Asda will retain the petrol forecourts business and the associated revenue and EBITDA (earnings before interest, taxes, depreciation, and amortisation).
“The forecourts have been an important footfall driver to the business, supported by its position as a price leader in the supermarket fuel sector.”