March 4, 2021
Business

DEAL PROBE Asda £6.8billion takeover by Issa brothers investigated by competitions watchdog

thesun– They agreed a deal with Asda’s US owner Walmart in October, which would bring the supermarket to British ownership for the first time in 20 years.

Under the plans, the brothers from Blackburn will take a majority stake, alongside their partner TDR, a London private equity group.

Walmart will also retain a minority stake in the business as part of the agreement and keep a seat on the company’s board.

The agreement is subject to regulatory approval, and the Competition and Markets Authority (CMA) today said it’s starting its so-called phase one probe into the deal.

During phase one, the CMA determines whether the deal will result in a “substantial lessening of competition”.

If so, it’ll launch an in-depth assessment called phase two, although involved parties may first offer to make changes to the deal to resolve any concerns.

The investigation comes after the European Commission (EC) referred the deal to the UK.

The agreement had met the EC’s criteria for investigation, which depends on the turnover of the firms involved in the transaction.

The CMA now has until February 18 to reach a decision on the first stage of its investigation.

It has set a deadline of December 22 for comments on the Asda takeover and its possible impact on competition in the UK.

The deal is expected to get the green light from regulators to go ahead.

The new owners have promised to keep prices in the supermarket low despite rising living costs, and will invest £1billion over the next three years to improve its convenience and online operations.

They have also vowed to keep the retailer’s headquarters in Leeds from where it built its heritage and roots.

Asda boss Roger Burnley will continue to head up operations.

It comes more than a year after plans to merge Asda and UK rival Sainsbury’s were railroaded by the competition watchdog.

The CMA ruled that the proposed tie-up couldn’t go ahead for at least ten years over fears consumers would face price hikes.

Walmart instead began sale talks in February this year but these were delayed due to the pandemic. They resumed again in July.

Asda was founded in 1949 and now serves around 19million customers a week.

The supermarket giant employs more than 146,000 people across the UK, through its 584 grocery stores, 18 standalone petrol stations and 33 Asda Living stores, as well as online.

A spokesperson for the Issa brothers and TDR Capital told The Sun: “As we expected, the CMA has launched a Phase 1 investigation into the acquisition of Asda following a referral from the European Commission.

“We are looking forward to working constructively with the CMA to address any questions they may have.”

The Sun has also contacted Walmart for comment

Mohsin and Zuber Issa founded petrol station operator EG Group nearly two decades ago.

The company, which was initially called Euro Garages, was founded after the acquisition of a single petrol station in Manchester, which cost £150,000.

The Issa brothers now own and operate nearly 6,000 sites across 10 countries.

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