The Issa brothers have completed the deal to buy Britain’s third-largest supermarket chain. Asda was valued at £6.8bn, but the brothers and the PE-firm TDR Capital paid just £780m. The rest was borrowed. So how does this kind of deal work? And will it leave Asda with too much debt?
TDR Capital, PE-firm specialised in leveraged buyouts, also co-owns EG Group, the worldwide petrol station business which built the brothers’ fortune, and which also has large borrowings. The Issas and TDR each contribute half of the £780m in cash to Asda’s former owners, Walmart, which has owned Asda since 1999.
Walmart, the American supermarket which owned Asda for the past 21 years, will retain a small stake in Asda, for £500m, along with a seat on Asda’s board. Then the new owners will sell off parts of Asda to raise the rest of the purchase price.
Asda will sell its warehouses and distribution system for £950m. It will still use them, but in future, it will have to pay rent to their new owners. And Asda’s 323 petrol stations will be sold for £750m to EG Group, adding to the portfolio of more than 6,000 around the world.
Read more at: BBC
By Ben King
