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The billionaire brothers who part-own Asda are splitting their main business interests, with Zuber Issa selling its stake in the supermarket to private equity firm TDR Capital.
Zuber owned 22.5% of the Leeds-based grocery chain after a £6.8bn takeover with older brother Mohsin and TDR three years ago. The sale of his share it was expected for monthsbut it was thought to be complicated by lock-up agreements.
The transaction will close between July and September, after which TDR will increase its stake from 45% to 67.5%, while Mohsin retains 22.5%. The former owner of Asda, the US retailer Walmartretains its share of 10%.
The brothers, who share a fortune of £5billion according to the Sunday Times Rich List, grew up in a terraced house in Blackburn, Lancashire.
The pair, who are in their 50s, made their fortune from petrol stations, starting their empire with one in Bury, Greater Manchester, after working in their father’s garage. After acquisition Asda in June 2021 with TDR they folded part of their forecourt business, EG Group, into the supermarket chain last year.
It was also announced on Friday that EG Group has sold its remaining UK petrol stations to Zuber for £228m. He said he would focus on running and managing these sites and devote more time to charitable initiatives. “With the continued focus and ownership of Mohsin and TDR, I am confident that Asda will achieve its growth ambitions,” he added.
Zuber will remain a shareholder and non-executive board member of EG Group, and the brothers will continue to have joint business interests in sportswear brand Castore and hydrogen truck startup HVS.
This week, a study by motoring group RAC showed that Asda is the UK’s most expensive supermarket fuel sellerafter the retailer’s owners abandoned their long-standing promise to be the cheapest on the market.
The GMB union said taking a bigger share of TDR would be bad news for shoppers and staff. Nadine Houghton, its national officer, said: “TDR Capital has serious questions to answer about the divestment of assets from Asda. Their private ownership is already bad for consumers – with Asda now the most expensive retailer for fuel – and bad for staff, with millions of hours cut from the shop floor.
“Further involvement of TDR can only lead to more bad news. Bosses must change course to protect Asda workers and stop this British retailer losing more market share.”
Reports earlier this year suggested there was a rift between the Issa brothers following the breakdown of Mohsin’s marriage, which was said to “sent shockwaves” through the family. In March, however, Mohsin Isa denied that there had been an alienation, saying the pair ‘get on extremely well’.
The Issa family face persistent questions about the funding of their business empire after pushing through debt-fueled deals at EG Group.
They put only £100m in cash in the original deal with Asda, combined with a further £100m from TDR Capital, with the balance of the buyout funded by the largest ever sale of sterling corporate bonds, according to Bloombergas well as a loan from EG Group’s parent company.
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Last October, Asda has acquired part of EG Group’s UK business for £2bn, giving it 356 predominantly freehold sites, including modern petrol station shops, and further blurring the boundaries between businesses. The deal was funded by an additional £770m of new borrowing and £450m in new funds from Issas and TDRs.
Mohsin Issa said: “Asda is an iconic British brand and we are committed to setting it up for long-term success and delivering great value for UK customers.
“I also want to add my personal support and best wishes for Zuber’s plans as we continue our successful family partnership, working as partners on our personal joint investments, family office philanthropy and Issa Foundation projects.”
Gary Lindsay and Tom Mitchell, managing partners of TDR Capital, defended their track record at Asda, saying they had made “significant progress in transforming” the chain.
They added: “We have added a large-scale convenience business, grown Asda’s store footprint from 623 to 1,200 stores and takeaway sites and launched a hugely successful loyalty app, which now has 6 million active customers, accounting for around half of total sales. “
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