TDR Capital is closing in on a deal to buy gas-station billionaire Zuber Issa’s stake in Asda as the private-equity firm tightens its grip on one of Britain’s biggest supermarket chains, according to people familiar with the discussions.
The agreement for Issa’s 22.5% stake would give TDR majority control and could be announced in coming weeks, the people said, asking not to be named with negotiations in flux.
They declined to specify the terms being discussed. TDR’s holding in Asda would rise to about two-thirds, while the transaction would further the dismantling of the relationship between brothers Zuber and Mohsin Issa.
The brothers teamed up with London-based TDR to buy Asda for £6.8 billion ($8.45 billion) just three years ago from Walmart Inc. Their tenure has been rocky, with critics questioning the new owners’ commitment to Asda’s historic focus on keeping prices low.
As food and gas prices surged in 2023 amid historic inflation, Asda, the third-largest UK grocer, had to rebut claims by Britain’s antitrust regulator that it was gouging customers.
Born in Blackburn, England, the sibling duo founded EG Group and built up a $30 billion empire of petrol stations and convenience stores across Europe, the US and Australia over the span of two decades, financing their ambitions with dozens of debt-funded deals. Since 2015, TDR has backed most of their significant acquisitions.
However, higher interest rates have pushed up the cost of servicing their debts and squeezed profits, forcing the pair to sell down assets. The latest deal would further unwind their business interests from each other and from TDR.
Zuber Issa began talks earlier this year about selling his stake in Asda, and plans to step back as co-chief executive officer of EG Group.
Mohsin Issa also intends to relinquish day-to-day control of Asda to focus on running EG Group. A search to find a new CEO for Asda is already under way, with headhunters from Spencer Stuart conducting a search, according to people familiar with the matter.
When the latest maneuvering is complete, Walmart will retain its 10% stake in the grocer, with Mohsin owning 22.5% and TDR the rest, the people said.
Representatives for TDR, Asda and the Issa brothers declined to comment, as did Spencer Stuart.
EG Group sold the majority of its UK and Ireland fueling outlets to Asda last year, in a move which helped repair EG’s balance sheet but left the supermarket chain with heavy debt.
