Asda to buy petrol station giant for £2.3bn amid fuel price fears

The billionaire Blackburn brothers behind Asda are to merge the supermarket with their UK petrol station business.

Asda said on Tuesday it had reached a £2.3bn deal to buy most of the UK and Irish operations of EG Group, the forecourt operator. Both businesses are owned by the Issa brothers, Mohsin and Zuber.

The move will create a combined group worth more than £9bn and is part of the Issa brothers’ plans to pay down debts amid soaring interest rates.

Zuber Issa, the co-owner of both businesses, said that EG Group “will benefit from a significantly strengthened balance sheet” by merging with Asda.

However, the combination is likely to stoke fears about a lack of competition in the petrol and diesel market.

Earlier this month the Competition & Markets Authority (CMA) said it believed weakening competition among supermarkets may be contributing to higher fuel prices. It has called in grocery chiefs to explain themselves.

Mohsin Issa, co-owner of Asda, said: “The combination of Asda and EG UK&I will be positive news for motorists, as we will be able to bring Asda’s highly competitive fuel offer to even more customers.”

The CMA is currently considering whether to approve Asda’s plan to buy 130 forecourts from Co-op under a separate deal.

EG Group, the fuel forecourt business Mohsin and Zuber Issa started in 2001, has grown from a single forecourt in Blackburn to one of the world’s biggest fuel operators.

Its rapid expansion has been bankrolled by London private equity house TDR Capital, which helped underwrite a string of acquisitions.

However, much of the dealmaking was funded by borrowing while interest rates were low. Rising interest rates are now putting pressure on the Issa’s heavily indebted empire.

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