New owners of Asda consider selling supermarket giant’s £3bn clothing business George
The new owners of Asda have considered selling the supermarket giant’s £3billion clothing business George, industry sources have told The Mail on Sunday.
The sale is believed to be among a number of strategies that have been examined – including separating its alcohol business and having it run by a third party.
Blackburn-based Zuber and Mohsin Issa, alongside private equity partners TDR, agreed to buy a majority stake in Asda from US retail giant Walmart earlier this month.
Writing on the wall?: The new owners of Asda have considered selling the supermarket giant’s £3billion clothing business George
The £6.7billion deal is still to complete and it is not yet clear how the buyers will fund the acquisition.
The brothers – who were this weekend awarded a CBE in the Queen’s birthday honours list – have already built up an £18billion petrol forecourt business, EG Group, through a series of audacious deals funded by cheap debt. The MoS revealed last week that interest on EG’s £7.7billion debt completely wiped out profit and significantly reduced its tax payments.
Advisers acting for the Issas and TDR examined a sale of EG Group – which operates forecourts, food service and convenience stores across Europe and the US – through an American stock market float a year ago. But, after preliminary explorations, they decided against putting forward a formal plan.
City sources said an initial public offering was pinned on a valuation of at least £9billion for EG Group – in part to cover the vast debts. But investors were concerned about the company’s heavy reliance on selling petrol and the long-term impact of the shift to battery-powered cars.
Representatives for the Issas and TDR declined to comment on any strategic plans or say why EG Group did not proceed with float plans last year.
Sources close to the brothers insisted splitting off clothing or other parts of the business was ‘not being contemplated’ and stressed the deal had ‘only just been announced and is some way from completion’. They insisted there was ‘no formal process’ to float the business last year.
But multiple senior supermarket sources said a sale of George could raise funds to reduce any debt used to buy the grocery chain.