Sep 29, 2020
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Asda set for UK owner with TDR/Issa brothers consortium in exclusive talks

Sep 29, 2020

Asda looks set to change hands, possibly as early as this week, with owner Walmart having entered exclusive talks with private equity firm TDR Capital. Walmart is expected to sell a controlling stake for over £6.5 billion, Sky News reported. 

George at Asda

Asda is one of the UK's biggest clothing retailers through its George line with a strong presence in womenswear, menswear and kidswear. It also sells beauty products and is a major homewares retailer.

Unlike some other groups that had a reported interest in the purchase, the consortium TDR has put together does have direct retail experience in a currently successful operation as it includes billionaire brothers Mohsin and Zuber Issa. They made their money from petrol stations, a channel that Asda also operates.

There’s still a degree of controversy around the sale with intense awareness in the UK of how the sale to private equity of major names like Debenhams and New Look turned out to be problematic for the retailers, leaving them carrying large and unsustainable debt loads.

More than one potential bidder for Asda had been expected to use debt to fund part of any deal. Asda owns the freehold of three-quarters of its stores and sale-and-leaseback deals for these could generate significant cash for the owners, although it would leave Asda with hefty future rent bills to pay.

That said, the Issa brothers have shown they know how to run a successful retail operation. In recent decades, their EG Group has gone global, expanding in the UK and Europe, North America and Australia via petrol stations and convenience stores.

TDR and the Issa brothers’ majority ownership of Asda would also mean that it was back in British hands for the first time since Walmart took over two decades ago.

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