Asda buys the UK and Ireland business of EG Group for £2.27bn

The companies hope to make synergy savings of around £100m from the deal over the next three years, largely through the combined group’s size.

It did not announce any job cuts but did not rule them out.

The deal puts an end to months of speculation about the future of the two firms, both owned by the billionaire Issa brothers.

The combined company is expected to be worth around £10bn, have revenues of around £30bn and employ in the region of 170,000 people.

The deal is also a way for EG Group to help pay down its debts.

The £2.3bn it gets from Asda from the sale will be combined with the 1.4bn dollars (£1.1bn) it gained from a deal in the US.

Taken together, these payments will help reduce EG’s reported £7bn debt pile.

Its net leverage will fall, meaning the amount of debt it has will be less than five times higher than its earnings before interest, tax, depreciation and amortisation (Ebitda).

But the GMB union has previously said the deal risks lumping part of that debt on to Asda, which already owes around £4.7bn.

There had been speculation of a tie-up between Asda and the EG Group since the Issa Brothers bought the supermarket chain for £6.8bn in 2020.

They swooped on Asda after former owner Walmart’s plan to sell it to Sainsbury’s was blocked.

Stuart Rose, who chairs Asda and EG Group, said: “Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen.

“Throughout my career in retail one thing has always been true – that meeting the evolving needs of customers is the route to growth.

“This transaction is all about driving growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business.”

Mohsin Issa said: “Asda is committed to saving customers precious time and money across their shopping baskets and on the forecourt.

“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.”

AJ Bell investment director Russ Mould said: “The decision of the Issa brothers to twin their EG petrol stations with Asda could pose a fresh competitive threat to Tesco and Sainsbury’s, though both supermarkets traded higher early on Tuesday suggesting investors are relaxed for now.”

In a call with journalists to discuss the deal, Mr Rose said that meeting the evolving needs of customers is a route to growth.

He added: "This transaction will enable Asda to stay in the fast lane. We believe this is a more competitive opportunity for consumers.”

Mr Issa told journalists: “This transaction is the right one for both companies.”